UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB



Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934





|                                                                                                   | For the annual period ended:                                                | December 31, 2004                              
|-------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -----------------------------------------------
|                                                                                                   | Commission File Number:                                                     | 000-22373                                      
|DIVERSIFIED FINANCIAL RESOURCES CORPORATION(Exact name of registrant as specified in its charter.)
|                                                                                                   | Delaware
(State of other jurisdiction of
incorporation or organization)     | 58-2027283
(I.R.S. Employer
Identification No.)
|                                                                                                   | 1771 Wolviston Way, San Diego, CA 
(Address of principal executive offices) | 92654
(Zip Code)                               
|                                                                                                   | 619-575-7041
(Registrant's telephone number
Including area code)            |                                                



Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.





|YES [X] | NO [   ]
|------- | --------



Indicate the number of shares outstanding of each of the
issuer's classes of common stock,

as of the latest practical date:

|
|
|



Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB [X].



The issuer's total consolidated revenues for the year ended
December 31, 2004 were $787,585.

The aggregate market value of the registrant's common
stock, no par value (the only class of voting stock), held by non-affiliates
was approximately $474,453 based on the average closing bid and asked prices
for the Common Stock on April 13, 2005 of $0.0001 per share.

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TABLE OF CONTENTS



Part I













Part II





STOCKHOLDER
MATTERS



PLAN OF
OPERATION







Part III







ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS....................27

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM
8-K..............................................28

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
........................................29

SIGNATURES.........................................................................................................................31





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PART I.



ITEM 1.	DESCRIPTION OF BUSINESS



Business Development



As used herein the terms the "Company," "DFRC," the
"Registrant," or the "Issuer" refers to Diversified Financial Resources
Corporation, its subsidiaries and predecessors, unless indicated otherwise.
DFRC was incorporated in the State of Delaware on January 6, 1993, as
Vaxcel, Inc.  On December 19, 2000, DFRC changed its name to eLocity
Networks Corporation.  On August 6, 2002, DFRC changed its name to
Diversified Financial Resources Corporation.



In 1999 DFRC sold all the rights to its technologies for
cash and discontinued all of its operations. DFRC continues to hold rights
to develop and commercialize a certain cancer antigen under a license
agreement from University College London, but no longer has any employees or
other ability to develop its technologies further without assistance.



In April of 2002, DFRC implemented a plan of
reorganization, which resulted in a change in management and the direction
of DFRC.  Pursuant to the plan of reorganization, DFRC acquired new
operations in the real estate investment sector and is currently in the
process of entering the land and natural resources sector.



As part of the plan of reorganization, DFRC transferred
ownership and control of a subsidiary, Value Plus Marketing, to its other
subsidiary, eLocity, Inc.. DFRC also announced a "spin-off" to its
shareholders of eLocity, Inc. stock through a stock dividend. The spin-off
should result in DFRC's shareholders acquiring direct ownership of eLocity,
Inc.'s common stock.



Shareholders of record, as of April 30, 2002, will
receive one-share of eLocity, Inc.'s common stock for each share of DFRC's
common stock owned on that date. eLocity, Inc. is a fully reporting public
company, which, prior to the completion of the spin-off must (1) file with
the Securities and Exchange Commission documents to register its common
stock and then (2) apply for trading status for its common stock on a public
market.  The responsibility for completing these necessary steps of the
described registered spin-off rests with eLocity, Inc.  Through the date of
this filing, only Thomas Clay and Mark Schellenberger, former officers of
DFRC had received their shares in the form of restricted common stock equal
to approximately 65% of the common stock of eLocity, Inc., the balance of
the spin-off has not been distributed as of the date of this filing.  Those
shareholders of record as of April 30, 2002, are still entitled to their pro
rata portion of the eLocity, Inc. registered shares.  eLocity, Inc. is still
holding those shares in escrow for the shareholders of record as of April
30, 2002.  The delivery date for those shares has not been disclosed to DFRC
at this time.



Business of Issuer



DFRC is currently a holding company with real estate
investment operations.  DFRC's plan is to create and manage a diverse
comprehensive portfolio of companies operating in several industries.
Currently, DFRC is focusing its resources on two industry sectors including
Land and Natural Resources and Real Estate Investments.  DFRC is currently
in the process of fully developing its business plan.

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Real Estate Investments



DFRC's real estate operations primarily involve the
acquisition, management, lease and sale of real estate through is
subsidiaries, Wichita Development Corporation (Wichita) and Diversified
Holdings XIX, Inc. (DHX).  During the last quarter of 2002, DFRC acquired
DHX which owns 4 residential properties located in Utah.  In the second
quarter of 2003, DFRC acquired Wichita which owned three buildings.  DFRC
will continue to locate and acquire undervalued real estate with little or
no cash down. Once acquired, DFRC will most likely lease such properties.
Though DFRC seeks to generate and maximize rental income through the
management and lease of the property, DFRC also intends to acquire real
estate which will substantially appreciate in value and for which DFRC can
realize a substantial gain upon disposition.  Nonetheless, there is a risk
that the properties acquired may decline in value rather than appreciate.



DFRC acquired DHX in a related party transaction on
November 8, 2002, pursuant to a Stock Exchange Agreement with John Chapman,
whereby DFRC acquired a 100% interest in DHX in exchange for 255,500
restricted shares of DFRC's common stock. DHX is a development stage company
incorporated in the State of Nevada whose assets consist of four income
producing residential properties.  For more information on this transaction,
see "Item 2 Description of Properties."



On June 30, 2003, DFRC entered into a Stock Purchase
Agreement with Nexia Holdings, Inc., Wichita Development Corporation, and
Diversified Holdings I, Inc. to acquire not less than an 83% ownership
interest in Wichita.  Wichita either directly or through its ownership of a
subsidiary owned three parcels of real estate, one located in Wichita,
Kansas, a second located in Ogden, Utah and a third located in Salt Lake
City, Utah.  In October of 2003, the Company's building located in Ogden,
Utah, was sold at a public auction through a trustee's sale, the Company
maintains title to four of the condominium units located in that building
that were not subject to the trustee's sale.  The agreement provides that
Nexia transfer to DFRC 100% of all shares that Nexia held in Wichita
(86,795,794) in exchange for a promissory note in the sum of $150,000 and
1,148,251 restricted shares of the common stock of DFRC with a guaranteed
resale value of $1.00 per share, whereby, within 36 months of the sale, DFRC
is bound to issue sufficient additional shares such that the total value at
liquidation of the shares will equal $1,000,000.  The convertible note could
have a substantive dilutive effect based upon DFRC's current trading price
of less than $0.0001.



Land and Natural Resources



DFRC intended to enter the coal reclamation business.  On
March 24, 2003, DFRC entered into a Stock Purchase Agreement with John
Chapman, Norman Mullins and Dennis Thompson, shareholders of MT & C
Diversified Land and Natural Resources Corporation (MT&C) wherein DFRC
agreed to purchase Six Million (6,000,000) shares or 100% of the total
issued and outstanding shares of MT & C in exchange for Six Million
(6,000,000) shares of DFRC's newly issued common shares.



MT & C is a development stage company incorporated in
the State of Nevada, whose sole asset is a Coal Slurry Impoundment, Plant
Site and Mine Waste Lease Agreement.  DFRC's wholly owned subsidiary,
MT&C Diversified Land & Natural Resources Corp., was not able to
close on the purchase of these assets and carry the requirements of the said
lease agreement with Headwaters, Inc.  This failure prevented MT&C from
starting the operation of a coal reclamation business.



DFRC has signed letters of intent to acquire and operate
mining concessions located in the Sierra Madre mountain range in Mexico,
details and description of the mining rights acquired by the Company are
more fully set forth in "Item 2.  Description of Properties."

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DFRC is currently seeking out other natural resource
companies or opportunities.  For more information of this transaction, see
"Item 2.  Description of Properties."



Competition



DFRC will be involved in intense competition with other
business entities, many of which will have a competitive edge over DFRC by
virtue of their stronger financial resources and prior experience in
business.  There is no assurance that DFRC will be successful with its
current business opportunities.



Governmental Regulation



DFRC's anticipates being subject to federal, state and
local regulations which may have a material impact upon its operations.



Employees



As of March 30, 2005, DFRC has three full time employees
and four part-time employees.



Risk Factors



You should carefully consider the following risks before
making an investment in our Company. In addition, you should keep in mind
that the risks described below are not the only risks that DFRC faces. The
risks described below are all the risks that DFRC currently believes are
material to our business. However, additional risks not presently known to
us, or risks that we currently believe are not material, may also impair our
business operations. You should also refer to the other information set
forth in this Annual Report on Form 10-KSB, including the discussions set
forth in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as our financial statements
and the related notes.



DFRC's business, financial condition or results of
operations could be adversely affected by any of the following risks. If we
are adversely affected by such risks, then the trading of our common stock
could decline, and you could lose all or part of your investment.



DFRC's auditor's report on our financial statements
includes an explanatory paragraph with respect to substantial doubt existing
about its ability to continue as a going concern



As of December 31, 2004, DFRC had incurred a loss from
operations and had an accumulated deficit. As a result, its financial
statements include a note stating that these conditions raise substantial
doubt about its ability to continue as a going concern, but the financial
statements do not include any adjustments that might result from this
uncertainty.

DFRC is subject to compliance with securities law, which expose it to
potential liabilities, including potential rescission rights.



DFRC has periodically offered and sold our common stock
to investors pursuant to certain exemptions from the registration
requirements of the Securities Act of 1933, as well as those of various
state securities laws. The basis for relying on such exemptions is factual;
that is, the applicability of such exemptions depends upon DFRC's conduct
and that of those persons contacting prospective investors and making the
offering. DFRC has not received a legal opinion to the effect that any of
our prior

5



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offerings were exempt from registration under any federal
or state law. Instead, it has relied upon the operative facts as the basis
for such exemptions, including information provided by investors themselves.



If any prior offering did not qualify for such exemption,
an investor would have the right to rescind its purchase of the securities
if it so desired. It is possible that if an investor should seek rescission,
such investor would succeed. A similar situation prevails under state law in
those states where the securities may be offered without registration in
reliance on the partial preemption from the registration or qualification
provisions of such state statutes under the National Securities Markets
Improvement Act of 1996. If investors were successful in seeking rescission,
we would face severe financial demands that could adversely affect our
business and operations. Additionally, if we did not in fact qualify for the
exemptions upon which we have relied, we may become subject to significant
fines and penalties imposed by the SEC and state securities agencies.



Additional Capital is Necessary to Implement DFRC's
Business Plan



DFRC does not believes that it has sufficient cash, cash
equivalents and operating income to maintain its business at its existing
level in 2005. DFRC will require significant new capital in order to execute
its strategic plan and believes that this capital will only be available
through an offering of shares of its common stock. DFRC's success in raising
this capital will depend upon its ability to access equity capital markets
and we may not be able to do so or to do so on acceptable terms. If it fails
to obtain funds on acceptable terms, it will not be able to execute its
strategic plan and would have to delay or abandon some or all of its plans
for growth. If it is able to obtain funds, it believes that the terms of
such arrangement will result in an offering that is highly dilutive to
existing holders of shares of our common stock because of the price at which
it would have to issue those shares and the large number of shares it would
have to issue at those prices.



There is no established, stable market for DFRC's
common stock.



DFRC's common stock is quoted on the Over-the-Counter
Electronic Bulletin Board ("OTCBB") and traded sporadically. A large number
of shares of outstanding common stock are restricted and are not
freely-tradeable. An established public trading market for our common stock
may never develop or, if developed, it may not be able to be sustained. The
OTCBB is an unorganized, inter-dealer, over-the-counter market that provides
significantly less liquidity than other markets. Purchasers of DFRC's common
stock may therefore have difficulty selling their shares should they desire
to do so.



Volatility of Stock Price

The trading price of DFRC's Common Stock has in the past and may in the
future be subject to significant fluctuations. In addition, the stock market
in general has experienced extreme price and volume fluctuations that have
affected the market price for many companies in industries similar to or
related to that of DFRC and which have been unrelated to the operating
performance of these companies. These market fluctuations may adversely
affect the market price of DFRC's Common Stock.



Penny stock regulations may impair DFRC's
shareholders' ability to sell their stock.



DFRC's shares of common stock may be deemed "penny
stock." Penny stocks generally are equity securities with a price of less
than $5.00 per share, other than securities registered on certain national
securities exchanges. Penny stocks are subject to rules and regulations that
impose additional sales practice requirements on broker-dealers who sell the
securities to persons other than established

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customers and accredited investors, and these additional
requirements may restrict the ability of broker-dealers to sell a penny
stock.



Any acquisitions that the Company undertakes could be
difficult to integrate, disrupt its business, dilute shareholder value and
significantly harm its operating results.



The Company expects to review opportunities to buy other
business or technologies that would complement our current business, expand
the breadth of our markets, or that may otherwise offer growth
opportunities.  If we make any future acquisitions, we could issue stock
that would dilute existing stockholders' percentage ownership, incur
substantial debt or assume contingent liabilities.  Potential acquisitions
also involve numerous risks, including:

problems assimilating the purchased operations,
technologies or products;

unanticipated costs associated with the
acquisition;

diversion of management's attention from our core
business;

adverse effects on existing business relationships
with suppliers and customers;

risks associated with entering markets in which we have
no or limited prior experience; and

potential loss of the purchased organization's or our
own key employees.



The Company cannot assure that it would be successful in
overcoming problems encountered in connection with such acquisitions and its
inability to do so could significantly harm its business.



DFRC is subject to various risks connected to the
ownership of real property.



DFRC's investments are subject to varying degrees of risk
generally incident to the ownership of real property. Real estate values and
income from DFRC's current properties may be adversely affected by changes
in national or local economic conditions and neighborhood characteristics,
changes in interest rates and in the availability, cost and terms of
mortgage funds, occupancy rates in DFRC's properties, the impact of present
or future environmental legislation and compliance with environmental laws,
the ongoing need for capital improvements, changes in governmental rules and
fiscal policies, civil unrest, acts of God, including earthquakes and other
natural disasters which may result in uninsured losses, acts of war, adverse
changes in zoning laws, and other factors which are beyond the control of
DFRC.



In addition, real estate investments are relatively
illiquid. The ability of DFRC to vary its ownership of real estate property
in response to changes in economic and other conditions is limited. If DFRC
must sell an investment, there can be no assurance that DFRC will be able to
dispose of it in the time period it desires or that the sales price of any
investment will recoup the amount of DFRC's investment.



DFRC's real property is also subject to real property
taxes. The real property taxes on the real property may increase or decrease
as property tax rates change and as the property is assessed or reassessed
by taxing authorities. If property taxes increase, DFRC's operations could
be adversely affected.



Reports to Security Holders



DFRC is not required to deliver an annual report to
security holders and will not voluntarily deliver a copy of the annual
report to the security holders.  If DFRC should choose to create an annual
report, it will contain audited financial statements.  DFRC intends to file
all of its required information with the SEC.  DFRC plans to file its
10-KSB, 10-QSB and all other forms that are or may become applicable with
the SEC.



The public may read and copy any materials that are filed
by DFRC with the SEC at the SEC's Public Reference Room at 450 Fifth Street
N.W., Washington, D.C. 20549.  The Public may obtain

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information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330.  The statements and forms filed
by DFRC with the SEC have been filed electronically and are available for
viewing or copy on the SEC maintained Internet site that contains reports,
proxy and information statements, and other information regarding issuers
that file electronically with the SEC.



ITEM 2. DESCRIPTION OF PROPERTY



Location and Description



DFRC's subsidiary, DHX owns four residential
properties located in Utah.  Three of the properties are encumbered, two
with long-term lines of credit and one with a 30 year mortgage.  The fourth
property is owned by DHX without any encumbrances.  Only one of the
properties is currently leased.



Wichita Development Corporation, DFRC's subsidiary, owned
three buildings at the time of its acquisition.  One located in Wichita,
Kansas, a second building in Salt Lake City, Utah and the third in Ogden,
Utah.  The building in Ogden, Utah has been sold at public auction and the
Wichita, Kansas building was deeded to the mortgage holder in lieu of
foreclosure proceedings being completed.



The Company is in the process of acquiring mining
concessions in an area of the Sierra Madre Mountains located in Mexico.
Operations have begun on the mine subject to those concessions and work is
proceeding to produce gold and silver ores for final processing.



Investment Policies



DFRC's policy is to actively pursue the acquisition
of real estate for investment income and appreciation in property value.
DFRC has plans to expand into commercial and industrial properties in the
near future.  DFRC policy is to focus on terms of financing and potential
return on Capital.  DFRC generally looks for properties that can be
purchased by assuming the existing financing or by paying the balance of the
purchase price with a nominal cash expenditure.



DFRC currently has no limitations on the percentage of
assets which may be invested in any one investment or the type of securities
and investments in which it may invest.  However, the board of directors, in
its discretion, may set policies without a vote of DFRC securities holders
regarding the percentage of assets which may be invested in any one
investment or type of investment.  DFRC's current policy is to evaluate each
investment based upon its potential capital to DFRC.



Under a future subsidiary, DFRC may enter the business of
originating, servicing or warehousing mortgages or deeds or trust.  However,
DFRC's current primary purpose is acquiring residential and commercial real
estate.



There is a risk that DFRC may lose control of its
properties through foreclosure if enough funds are not derived from the
rental income for both the financing and operation of its properties.
Currently, DFRC does not have sufficient rental revenues to cover the debt
service and operating costs of all properties. DFRC currently has to use
capital from other sources to fund this deficit. Although management hopes
to increase the rental income so that such income will cover both operations
and debt service, no such assurances can be made.  There is also a risk that
the properties acquired may decline in value, no assurances can be made that
this will not happen.

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Description of Real Estate and Operating Data



Office Location



DFRC has a lease for its approximate 1600 sq. ft. office
located at 1771 Wolviston Way, San Diego, CA 92154 from Mr. Chapman, the
president of DFRC.  The office space is subleased in a related party
transaction in Mr. Chapman's residence.  The term of the lease is from May
2002 through May of 2005; monthly rental is in the amount of $6,500.  The
lease has a three year extension available for a monthly rental of $8,500.
DFRC is liable for all utilities for the premises.



As of April 1, 2005, DFRC has moved its headquarters in
to its own office space at 8765 Aero Drive, Suite 221-San Diego, California
92123.



Residential Properties



Below is a listing of the four residential
properties owned by DFRC's consolidated subsidiary, Diversified Holdings
XIX, Inc.  ("DHX") as of December 31, 2004. Also included are any changes in
ownership status of such properties which have occurred between the end of
2002 and the filing of this Form 10-KSB.  All references to current
principal balances of encumbrances against the properties are as of December
31, 2004 only.  DHX competes with other residential property available for
lease in the Salt Lake City area.



Property located at 3961 South 565 East, Salt Lake City,
Utah 84107, 1,100 square feet, three bedroom duplex, estimated current value
$196,000, approximate debt as of December 31, 2004, $99,193, estimated
equity $96,807. Financing for this property carries an interest rate of
9.25% on a 30-year fixed rate, with final payment due in the year 2031.  The
property consists of two units, the monthly rental for one unit is $500 and
is leased on a month to month basis, the second unit was damaged as a result
of fire in the fourth quarter of 2003.  Repairs to that unit are completed
and is currently being marketed to potential tenants.  The tenants will be
responsible for the payment of all utilities for the property.



Property located at 5721 South 1080 East Murray, Utah,
84107, value of $100,000, there is no debt on this building as of December
31, 2004, estimated equity $100,000.  The property is currently leased to
one tenant on a month to month basis, with a monthly rental of $500.  The
tenant is responsible for the payment of all utilities on the property.



Property located at 44 West 300 South, Salt Lake City,
Utah 84101, 900 square feet, 1 bedroom condominium, estimate current value
of $125,000, debt as of December 31, 2004 is $ 112,975, estimated equity
$12,025.  The property is currently leased to a tenant on a month to month
basis, with a monthly rental of $900.  The tenant is responsible for the
payment of all utilities on the property.



Property located at 315 East 920 South Layton, Utah
84041, 3,500 square feet, 5 bedroom, two story residence, estimate current
value of $195,000, debt as of December 31, 2004 is $156,718, estimated
equity $38,282. Recent improvements include improvements to the basement of
the property, replacement of the carpet and tile at a cost of approximately
$22,500.



DFRC believes that each of the four residential
properties is adequately insured.

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Commercial Properties



Salt Lake Development, Inc. ("SLD")



SLD is a majority owned subsidiary of the Company,
acquired on June 30, 2003 by the Company.  SLD purchased a two-story 18 unit
apartment building, located at 2402 Wall Avenue in Ogden, Utah, on July 23,
1998. The property included an additional 7,500 square feet of commercial
space. The total purchase price was $850,000. SLD put $5,000 down and
financed the balance.  The $675,000 balance was being financed by the seller
on a promissory note dated July 23, 1998, with payments based upon a 20-year
amortization with an interest rate of 7% for the first two years, which
escalated to 9% beginning on September 1, 2000.  The holder of the note
foreclosed on the property in October of 2003 taking 14 unit of the building
and the commercial space, SLD retains title to four units in the buildings
and is attempting to rent those units, two of the units are vacant as of
March 29, 2004.



SLD, a majority owned subsidiary of the Company also owns
a building located at 268 West 400 South in Salt Lake City, Utah. The
building is two stories with 14,347 net rentable square feet of office
space. SLD purchased the property on March 6, 1998, by exercising its option
to purchase the property through the payment of $418,762. SLD financed the
purchase price and borrowed an additional sum of $222,489, which is secured
by the property. At December 31, 2004, the outstanding debt on the property
was $ 557,653 with monthly payments of $5,341.43. SLD is of the opinion that
this property is adequately covered by insurance.  As of November 30, 2004
there are no tenants occupying the building.  There are 14,347 square feet
of office space currently available for lease as office space in the
building. The office space in the building competes for tenants with other
available office space in the downtown area of Salt Lake City.  SLD is
currently in default under the terms of its loan.  SLD intends to cure the
default in April of 2005.



Wichita Development Corporation ("Wichita")



Wichita was acquired by the Company on June 30, 2003.
Wichita held title to The Trade Center Building.  The building was purchased
for $540,554 on August 30, 2000. The Trade Center Building, which opened in
1921, is located in the downtown business district of Wichita, Kansas, at
120 South Market Street. The building is a 48,500 square foot, seven story
office building. Wichita holds title to the property subject to a mortgage
of $ 268,452 at December 31, 2003.  The taxed assessed value of the building
is $600,000.  Mortgage payments were not current on the building and a deed
in lieu of foreclosure was granted by Wichita to the mortgage holder on the
building.



Land and Natural Resources



Mexican Mining Interests



DEFINITIONS



The following definitions to registrants engaged or to be
engaged in significant mining operations:



1. Reserve.  That part of a mineral deposit which could
be economically and legally extracted or produced at the time of the reserve
determination.
2. Proven (Measured) Reserves. Reserves for which (a)
quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results
of detailed sampling and (b) the sites for inspection, sampling and
3. measurement are spaced so closely and the geological
character is so well defined that size, shape, depth and mineral content of
reserves are well-established.
4. Probable (Indicated) Reserves. Reserves for which
quantity and grade and/or quality are computed from information similar to
that used for proven (measured) reserves, but the sites for inspection,
sampling and measurement are farther apart or are otherwise less adequately
spaced.  The degree of assurance, although lower than that for proved
(measured) reserves, is high enough to assume continuity between points of
observation.



MEXICO



The Republic of Mexico is a democratic republic with a
stable political environment and a sophisticated western style legal system.
  Mexico has been a party to the North American Free Trade Agreement since
1994 and has a comparable tax and trade regime to the United States.  The
country has a 400 year old mining history and the government actively
encourages mining by giving mineral development precedence over surface
usage rights.



LOCATION AND MEANS OF ACCESS



The claim block collectively referred to in this annual
report as La Curra Project, is located at 27 degrees 15' North latitude, and
108 degrees 20' West longitude, just northwest of Temoris in the
southwestern portion of the State of Chihuahua in the Republic of Mexico
(Map 1, Exhibit 99(cxv)).  The project is located in the Llanitos Mining
District in the municipality of Guazapares at an elevation of 1,350 meters
(4,429 feet) above mean sea level.



The small town of Temoris is approximately 265 kilometers
(approximately 165 miles) southwest of Chihuahua City, Temoris, population
2,500, can be reached by an inland road or via railroad line from Chihuahua
City.  There are also small dirt landing strips at the town of Temoris and
at the project area that can be used for access by single engine light
aircraft.  The flight from Chihuahua is about 2 hours while the drive takes
about 8 to 9 hours.  During the rainy season, July through September, use of
a 4-wheel drive truck is strongly recommended. From Temoris by dirt road the
project area is 10 kilometers (approximately 6 miles) to the northwest and
is easily accessible with 2-wheel drive truck.



TITLES, CLAIMS, LEASES AND/OR OPTION AGREEMENTS



The Company is currently conducting operations and
improvements on the property subject to the mining concessions under the
four month due diligence period granted it by the option agreements.  This
period allows the Company to retain all proceeds from its operations and
subjects the company to make certain payments provided for by the option
agreement.  This period will expire on or about April 16, 2005, at which
time the Company expects to sign and receive all necessary paperwork to
secure all rights to the mining concessions as set forth in the following
description.



Sulema No. 2			Title number 191332 - Area
15.8280 hectares  (39 acres)

El Rosario			Title number 185236 - Area 10.9568
hectares (27 acres)

La Curra			Title number Exp 2515 - Area 13.8815
hectares (34 acres)

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REGIONAL GEOLOGY



Los Llanitos Mining District is situated on the western
flank of the Sierra Madre Occidental volcanic province.  The volcanic
province is aligned along a northwest-southeast axis and extends nearly
1,200

kilometers in length by 2-00-300 kilometers in width.
Two largely co-extensive igneous sequences, the Upper and Lower Volcanic
Series (Wisser, 1966) make up the volcanic province.  The project is located
in the Barranca (canyon) sub-province of the Sierra Madre Occidental
volcanic province (Plate 2, Exhibit 99(cxvii)).  The Barrancas sub-province
shows youthful topography.  Remnants of flat ground on the highest
interstream divides prove the former extension westward of the mature
surface still exposed on the plateau to the east.  These divides are
separated by youthful steep-sided canyons, the greatest of which reach
depths of 2,000 meters.



The Lower Volcanic Series (LVS) reach thicknesses of up
to 1,000 meters and is composed of abundant batholithic as well as volcanic
rocks of dominantly intermediate composition. The LVS unconformably overlies
or intrudes folded Mesozoic strata or late-Paleozoic terrain.  The LVS are
late-Cretaceous to Eocene in age (Clark et al, 1979), the older limit being
fixed by age determinations on intrusive phases that cut the surrounding
andesites.  The LVS is dominated by significant northwest regional block
faults forming loci for epithermal mineralization in the region.  The Upper
Volcanic Series (UVS) is Oligocene to Miocene in age (Clark et al, 1979) and
readily identified in the filed by the steep cliffs of rhyolitic tuffs,
flows and ignimbrites attaining thicknesses of up to 120 meters.  In the
project area the UVS dips 15 degrees to the southwest and strikes N 25
degrees W.



The UVS is composed of dominantly horizontally stratified
rhyodacitic and rholitic ignimbrites accompanied by rhololotic flows and
domes with main or mafic lava flows.  The interlayered lave flows and
tuffaceous sediments that form the crestal plateau of the Sierra Madre are
similar to rocks that blanket areas of the western United States.



A discussion of the tectonic setting for the area is
given in Miller, 1988.  The volcanic rocks which form this province have
been uplifted into a long, northwest trending regional anticline with
superimposed domes, anticlines and structural depressions.  Ore districts
lie mainly along the crest and higher flanks of the anticline.  Tensional
fissures induced by stretching of the domes volcanic massif became loci for
precious-metal bearing veins. (Wisser, 1966).



LOCAL GEOLOGY



The LVS hosts the precious mineralization and is
represented in the area by andestic red-bed agglomerates, lava flows,
ash-flow tuffs and volcaniclastics with intercalated calcareous strata
deposits.  (Plate 1, Exhibit 99(cxvi))  The LVS in the Llanitos area dips 30
degrees northeast, strikes N 25 degrees W and reaches thicknesses of up to
400 meters.



The Upper Volcanic Series (geological sequence is derived
from caldera-related, large volume rhyolitic ash-flow tuffs and calc-alkalic
rhyolitic ignimbrites).  Geographically this unit is gently dipping to
flat-lying and makes up the plateau caps in the Sierra Madre.



A description of the geology of the Llanitos Mining
District is given in Soberanes, et al, 1984 (Appendix D, Miller 1988a,
Exhibit 99(cxviii)).  The Llanitos Mining District is defined by five quartz

12



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vein deposits.  These veins are:  1) the Convirginia-La
Patria vein, 2) the Guadalupe-Las Animas vein, 3) the Sulema vein (La Curra
project), 4) the Tres de Mayo-Guerra al Tirano vein, and 5) La Verde-Tres
Carlos Dos vein. (Plate 1) (Miller, 1988b, Exhibit 99(cxviii)).  The
deposits are hosted in domed sediments of the LVS.  The fissure-veins of the
Llanitos district are epithermal, precious-metal vein systems in which
localization has been controlled by regional tectonic fracturing of the
volcaniclastic rocks of the LVS.



The vein deposits of this district are spactially and
temporally associated with a dacite porphyry intrusive in the northwest
portion of the district, 4 kilometers west of the Sulema vein.  This
intrusive is exposed through an erosional window in the intruded Lower
Volcanic Series (Plate 1).  Cretaceous limestones outcrop to the southwest
of this intrusive (Soberanes et al, 1984).



Vein Geology and Mineralogy



The Sulema vein extends for 1,100 meters along strike.
The mine workings extend for 440 meters along strike and to at least 100-120
meters vertically from the surface.  The vein dips 55 degrees to the
northeast.  The vein's true width varies from 10 to 20 meters but the highly
mineralized central zone averages 1.3 meters.  The vein is a complex
epigenetic breccia system with very low sulphidation.  The high-grade silver
and gold mineralization rarely exceeds 1% total sulfide content.  The gangue
mineralogy is composed of quartz, calcite, siderite, chalcedony, adularis,
K-spar, sericite, limonite, hematite, and rare pyrite.



Konkin's (1998) very detailed description of vein geology
and mineralogy is included in Section 7 of Exhibit 99(cxviii).  Generally
the vein system has five distinct phases: a carbonate phase, a siliceous
phase, a quartz/carbonate phase, an authchthonous breccia, and an
allochthonous breccis.  The most economically significant phase is the
quartz/calcite phase with silver and gold mineralization over 3-4 meter
widths in the upper section and 1-2 meter widths in the lower portion of the
vein.  To a lesser degree, the breccias may contain elevated silver and gold
values but are generally lower in grade.  The calcite and silica phases are
generally barren with regard to economic grade mineralization.



HISTORY OF OPERATIONS



The mining operation at La Curra project is currently in
the development stage.  In 1984, claims encompassing the Sulema vein had
been purchased by Mr. Jim Patterson and his American partners.  At that
time, the epithermal, precious-metal vein had some emino pits and open cuts
across the top of the vein system.  The vein was essentially high-graded by
prospectors removing very little tonnage.  Initially, Mr. Patterson and his
partners with Minera Tecpan, S.A. de C.V. began the operation as a 40
tonne/day gravity/flotation mill circuit.  Previous production between 1984
and 1993 is estimated at between 50,000 and 110,000.  The vein was
selectively mined underground over two-to ten-meter widths.  The ore was
mucked out of the stopes by shovel, then picked up by a one-yard scoop and
transported to the portal entrance where the ore was loaded and trucked to
the mill.  Access to the workings was and still is through the No. Five
Leval portal.



Mr. Patterson's partners passed away in an airplane
accident and in 1986 Mr. Patterson brought in Ibance, as a new partner.
>From 1986 to 1989, Rebecca A. Miller conducted her Master of Science Thesis,
from the University of El Paso, Texas for the area (Miller, 1988b).  The
thesis report explores several of the veins within the Llanitos Mining
District and presents the geological setting and mineralization for these
veins.

13



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In 1991, Kalahari Resources Inc. optioned the
property and completed 29 reverse circulation drill holes.  Results were
generally favorable and the drill results are provided in the Appendix F of
James Patterson's 1998 mining report (Exhibit 99(cxviii).  At the time
Kalahari Resources, Inc. was experiencing financial difficulties and decided
to drop the drilling program.



Based on the Kalahari drilling results, in 1993 the
milling capacity was increased to 120 tonnes/day, and from 1994 to 1998 the
mine was in continuous production with the mill operating 24 hours, 7 days a
week, with Christmas and Easter off.  Production summary from 1994 to 1998
for the La Curra project states that the average operating cost from 1994 to
1998 is estimated as US$28/tonne.



In 1998, Silver Standard Mexico, S.A. de C.V. entered
into an option agreement with Ibance in order to purchase 100% of the claim
block, then consisting of 9 claims, based on past production of the mine and
Kalahari's past reverse circulation drilling results.  Silver Standard
conducted a chip sampling and drilling program.  A drilling program was
executed and reported in La Curra Project, Preliminary Diamond Drill Hole
Program, Chihuahua, Mexico (Konkin, 1998)  K.J. Konkin, P. Geo prepared the
report while working for Silver Standard Resources, 1180-999 West Hastings
Street, Vancouver, British Columbia, V6C 2W2.  Results are provided in Table
2.  Based on the very low silver prices at the time, Silver Standard did not
exercise their option to purchase the claim block.



To date, approximately 180,000 to 240,000 tonnes of
material have been mined 440 meters along strike to a depth of 100-120
vertical meters from surface and along three principle levels and six
sub-levels along a 440 meter long strike length.  Since 1998, no further
significant production was realized and the mine was shut down.



RECENT ACTIONS



During 2004, Diversified Financial Resources Corporation
(the Company), a holding company trading under the stock symbol DFLR.OB,
pursuant to signed Letters of Intent and with the cooperation of all parties
to the agreements, has begun efforts to refurbish and operate the La Curra
Mine.



Refurbishing of the processing plant located at La Curra
is nearing completion and the mill will be fully operational to begin the
processing of some ore that had been mined and is stored on the concession
site.  All equipment and material necessary to start the plant operations
have been acquired and are either on the site or are being delivered to the
site.  The site supports 50-60 workers with their families housed in small
primitive houses.  Included are a few small stores.



The Company plans to proceed with operations based on
past production records, core and reverse circulation drilling results, a
current interpretation of those results, and the favorability of this
historic silver-producing region as a whole.  Water is pumped from the river
in the Arroyo Blanco below the site and is stored in a concrete cistern on
site.  Large stands of pine and oak forests are common several kilometers to
the east of the mine site.  Wood for timbering and mining needs is abundant.
  Electricity is generated on site using a diesel-powered electric plant.
Estimates of projected production have been made assuming 67% and 80% mill
capacity.

14



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ITEM 3. LEGAL PROCEEDINGS



Securities and Exchange Commission v. David M. Wolfson,
et al.  On October 16, 2003 a civil complaint was filed by the
Securities and Exchange Commission in which DFRC was named as a respondent.
The Company's president John Chapman was also named as a respondent.  The
suit was filed in the United States District Court for the District of Utah
and bears the docket number 2:03CV00914DAK and the style of the case is:
"Securities and Exchange Commission v. David M. Wolfson; NuWay Holdings,
Inc., a Nevada corporation; Momentous Group, LLC, a Utah limited liability
company; Leeward Consulting Group, LLC, a Utah limited liability company;
Sukumo Limited, a company incorporated in the British Virgin Islands (a.k.a.
Sukumo Group, Ltd., Fujiwara Group, First Chartered Capital Corporation,
First Colonial Trust, First China Capital and International Investment
Holding); Michael Sydney Newman (A.K.A. Marcus Wiseman); Stem Genetics,
Inc., a Utah corporation; Howard H. Robertson; Gino Carlucci; G & G
Capital, LLC an Arizona and Utah limited liability company; F10 Oil and Gas
Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple; Grateful
Internet Associates, LLC, a Colorado limited liability company; Diversified
Financial Resources Corporation, a Delaware

corporation; John Chapman; Valesc Holdings, Inc., a New
Jersey corporation; Jeremy D. Kraus; Samuel Cohen; NCI Holdings, Inc., a
Nevada corporation."  The complaint alleges that the Company failed to
accurately and fully disclose the nature of the Company's relationship to
The Sukumo Group, Inc., including the failure of Sukumo to complete the
purchase of the shares and alleges that Sukumo acted as a selling agent for
the Company. The complaint alleges that the Company and Mr. Chapman failed
to accurately and fully disclose the nature of the Company's relationship to
The Sukumo Group, Inc. and timely disclosure of the execution of the
Offshore Purchase Agreement.  The complaint further alleges that Mr. Chapman
took actions during 2003 to manipulate the price of the Company's stock in
the marketplace. The complaint also faults The Sukumo Group Inc.'s actions
with regard to the sale of common stock to off shore purchasers for failing
to disclose the interest that Sukumo had in each sale, reporting that it was
taking a 1-2% commission on the re-sale rather than disclosing that it was
keeping 70% of the proceeds of each transaction.  The Company has entered
into settlement discussions with the SEC which are ongoing at this time.



Interbay Funding LLC v. Wichita Development
Corporation, et al.  Suit was filed in the District Court of Sedgwick
County, Kansas, case No. 03CV2074.  The case seeks to foreclose on the
mortgage that is secured by The Trade Center Building, located in Wichita,
Kansas.  Occupancy of the building has been reduced due to operating costs
of the building and competition from other buildings in the Wichita business
district and has resulted in cash flow difficulties in making payments on
the building.  The Company has delivered a deed in lieu of foreclosure as
settlement of the claims made by Interbay Funding in this claim.



James Stacey v. Successor in Interest to Salt Lake
Development Corporation and John Does 1-10.  This complaint was filed in
the Second Judicial District Court, County of Weber, State of Utah, Civil
Case No. 040909281 on or about the 9th of December, 2004.  In the
Complaint Mr. Stacey seeks the recovery of $13,387.02 in real property taxes
that he paid on condominiums that belong to Salt Lake Development
Corporation.  An answer has been filed denying any liability to Mr.
Stacey.



ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY
HOLDERS



None.



PART II



ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS



DFRC's common stock is quoted on the Electronic
Bulletin Board under the symbol, DFLR.OB (formerly  DFRC.OB and ELOC.OB).
Trading in the common stock in the over-the-counter market has been limited
and sporadic and the quotations set forth below are not necessarily
indicative of actual market conditions. Further, these prices reflect
inter-dealer prices without retail mark-up, mark-down, or commission, and
may not necessarily reflect actual transactions. The high and low bid prices
for the common stock for each quarter of the fiscal years ended December 31,
2003 and 2004.





|PERIOD                                       | BID PRICES
|-------------------------------------------- | ----------
|                                             | HIGH      
|Quarter Ended December 31, 2004-Post
reverse | $0.03     
|Fourth Quarter-pre reverse split
(2)         | 0.0002    
|Quarter Ended September 31, 2004             | 0.0015    
|Quarter Ended June 30, 2004                  | 0.0089    
|Quarter Ended March 31, 2004                 | 0.17      

15



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|Quarter Ended December 31, 2003  | 1.01    |  | 0.16
|-------------------------------- | ------- |  | ----
|Quarter Ended September 30, 2003 | 2.70    |  | 1.01
|Quarter Ended June 30, 2003      | 1.75    |  | 1.50
|Quarter Ended March 31, 2003     | 2.50(1) |  | 0.01

(1) The board of directors of DFRC
authorized a reverse split of the common stock of DFRC on February 7, 2003.
The reverse split was carried out on a 1 for 200 basis, the low for the
quarter ended March 31, 2003 took place prior to the reverse and the high
occurred subsequent.

(2)  The board of directors of DFRC authorized a reverse
split of the common stock of DFRC that became effective on November 1, 2004.
  The reverse split was carried out on a 1 for 1,000 basis.  The high and
low prices for the fourth quarter are divided into pre and post reverse
split periods, the prior prices were not adjusted to reflected the effects
of the reverse split.





Such quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission. Such quotes are not necessarily
representative of actual transactions or of the value of DFRC's securities,
and are in all likelihood not based upon any recognized criteria of
securities valuation as used in the investment banking community.



Shareholders



As of April 13, 2005, there were an estimated 365 holders
of record of DFRC's common stock. Certain of the shares of common stock are
held in street name and may, therefore, be held by several beneficial
owners.



Dividends



Since the year end December 31, 2003, DFRC has
not declared any cash dividends.



On April 30, 2002, shareholders of record on that date
became entitled to receive a stock dividend of one share of eLocity, Inc.,
for every share of DFRC held.  The spin-off shares are being held in escrow
with eLocity, Inc., and will not be distributed until eLocity, Inc.
completes a registration statement.



DFRC has never paid a cash dividend on its common stock.
The payment of dividends may be made at the discretion of the Board of
Directors of DFRC and will depend upon, among other things, DFRC's
operations, its capital requirements, and its overall financial condition.



Description of Securities



As of April 13, 2005, there were 4,481,597,981 shares of
common stock, no par value, issued and outstanding. Of those shares at least
38,706,663 shares are restricted securities of DFRC within the meaning of
Rule 144(a)(3) promulgated under the Securities Act of 1933, as amended,
because such shares were issued and sold by DFRC in private transactions not
involving a public offering. These 38,706,663 restricted securities are held
by affiliates and may only be sold pursuant to a registration statement or
pursuant to Rule 144.



In general, under Rule 144, as currently in effect,
subject to the satisfaction of certain other conditions, a person, including
an affiliate of DFRC (in general, a person who has a control relationship
with DFRC) who has owned restricted securities of common stock beneficially
for at least one year is entitled to sell, within any three-month period,
that number of shares of a class of securities that does not exceed the
greater of (i) one percent (1%) of the shares of that class then outstanding
or, if the common stock is quoted on NASDAQ, (ii) the average weekly trading
volume of that class during the four calendar weeks preceding such sale. A
person who has not been an affiliate of DFRC for at least the three months
immediately preceding the sale and has beneficially owned shares of common
stock for at least two (2) years is entitled to sell such shares under Rule
144 without regard to any of the limitations described above.



No prediction can be made as to the effect, if any, that
future sales of shares of common stock or the availability of common stock
for future sale will have on the market price of the common

16



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stock prevailing from time-to-time. Sales of substantial
amounts of common stock on the public market could adversely affect the
prevailing market price of the common stock.



On February 24, 2004, the board of directors approved an
amendment to the Certificate of Incorporation of the Company to increase the
number of authorized common shares from 200,000,000 to 10,000,000,000.  The
increase was approved by a holder of the majority of the issued and
outstanding shares of common stock, notice of the increase has been provided
to all shareholders of record and the filing of a Certificate of Amendment
with the State of Delaware.



200 to 1 Reverse Split



On February 7, 2003, DFRC purported to effect a 1 for 200
reverse split of its common stock, but failed to give proper notice to its
shareholders.  To rectify this, DFRC furnished an information statement
dated May 29, 2003 to all holders of the common stock of DFRC. The
information statement disclosed that DFRC's Board of Directors had
authorized the reverse stock split and that shareholders holding in excess
of 50% of the outstanding common stock of DFRC had provided a written
consent, approving the reverse stock split for all shareholders of record on
May 29, 2003, with fractional shares being rounded up to the next whole
share.  The reverse stock split was accordingly effected as of July 7, 2003.
  All fractional shares have been rounded up to the nearest whole share.
DFRC's then began trading on the OTC Bulletin Board under the symbol
"DFRC.OB" The number of authorized shares will remain the same at Two
Hundred Million (200,000,000). The Board of Director effected the reverse
split in compliance with Rule 10b-17.



1,000 to 1 Reverse Split



On November 1, 2004, DFRC made effective a 1,000 for 1
reverse split of its common stock.  An Information Statement was filed by
the Company to disclose the reverse stock split and reflected the approval
of the board of directors of the Company.  All fractional shares will be
rounded up to the nearest whole shares.  As a result of the reverse split
the Company in now trading on the OTC Bulletin Board under the symbol
"DFLR.OB"



Preferred Stock



DFRC has authorized 2,000,000 shares of preferred stock
with a par value of $.001, and established a series of preferred shares
designated as Series A Convertible Preferred Stock, consisting of 1,000,000
shares.  The Series A Convertible Preferred Stock has the following rights
and privileges:

1.  The shares are convertible at the option of the
holder at any time into common shares, at a conversion rate of one share of
Series A Convertible Preferred Stock for 100 shares of common stock for a
period of 10 years from the issuance date.

2.   Requires two-thirds voting majority to authorize
changes to equity.

3.   Redemption provision at option of directors for $10
per share plus the greater of $3 per share or 50% of market capitalization
divided by 2,000,000.

4.  The holders of the shares are entitled to one hundred
(100) votes for each  share held.

5.  Upon the liquidation of the Company, the holders of
the shares will be entitled to receive $10 per share plus redemption
provision before assets distributed to other shareholders.

6.  The holders of the shares are entitled to dividends
equal to common share dividends.



On September 16, 2004, the Company filed with the Nevada
Secretary of State a Certificate of Designation of the Rights and
Preferences of Preferred Stock of Nexia Holdings, Inc.  This designation
created 200,000,000 shares, no stated par value, of Series B Convertible
Preferred Stock, out of the 200,000,000 authorized shares of preferred stock
of the Company.  The Series B Preferred Stock holds voting rights equal to
500 shares of common stock for each share of the

17



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Series B Preferred Stock issued, the shares do not have
any conversion rights into common stock or any other class of stock of the
Company.  This filing was reported on an 14c filing made on September 21,
2004.



Recent Sales of Unregistered Securities



There are no recent sales of unregistered
securities by DFRC during the period covered by this report, which have not
been previously disclosed in Form 10-QSB filings or Form 8-K filings.



ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION



General



DFRC operates as a holding company.  DFRC's primary
operations involve creating and managing a diverse comprehensive portfolio
of companies operating in key industry sectors.  DFRC's primary operations
consist primarily of two areas of focus which include real estate holdings
and land and natural resources.



Real Estate Operations



DFRC's objective with respect to its real property
operations is to acquire, through its subsidiaries, properties which
management believes to be undervalued and which DFRC is able to acquire
through the limited expenditure of cash or other consideration.  DFRC
through its subsidiaries will attempt to acquire such properties by assuming
existing favorable financing and paying the balance of the purchase price
with the delivery of common stock of either DFRC or the subsidiary.  DFRC
will make investments in improvements to the acquired properties with the
objective of increasing occupancy, rental rates and thus improving the cash
flows of the properties.  Currently DFRC has negative cash flows from its
rental operations for the year ended December 31, 2004.  As the properties
were acquired during the past year DRFC will seek to minimize and reverse
the cash flow deficit through the efforts stated above.



Off-balance Sheet Arrangement



DFRC has no off-balance sheet arrangements.



RESULTS OF OPERATIONS



Revenues



DFRC had revenues of $61,082 for the year ended December
31, 2004, compared to revenues of $64,967 for 2003. DFRC's expenses were
$5,463,474 the year ended December 31, 2004, an increase from $709,260 for
2003. Accordingly, DFRC suffered a net loss for the year ended 2004 in the
amount of $5,927,969 as compared to a net loss in the year 2003 of
$1,020,908.



Expenses



General and administrative expenses for the year ended
December 31, 2004 were $5,080,685 compared to $709,260 for the year ended
December 31, 2003.  The expanded operations, the investment of time and
advisors in investigation of potential acquisitions all contributed to the
increase of total expenses.  A large factor of the increased costs was
incurred through the compensation paid to officers, directors, employees,
advisors and consultants of the Company.  Additionally, the Company incurred
$382,789 in expenses related to the Mexican mining concession during the
year ended December 31, 2004, including the payment of $300,000 to preserve
the exclusive four month option period provided by the letter of intent to
acquire the

18



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mining concessions and there were no such expenses during
the similar period for 2003.  The loss from operations for the Company
increased to $5,402,392 for the year ended December 31, 2004, compared to a
total loss for the prior year of $644,293.



Liabilities



The total current liabilities of the Company increased to
$2,257,282 for the year ended December 31, 2004 from $1,185,566 for the year
ended December 31, 2003.  In 2004, all of the Company's debt related to real
estate properties is classified as current.  The Company recorded accrued
payroll and payroll taxes in 2004 totaling $284,885, and there were no such
obligations in 2003.  The Company accrued expenses in 2004 totaling $265,362
related to the normal course of business, and there were fewer such
obligations in 2003.  The Company accrued $296,499 in 2004 for penalties and
interest related to settling litigation with the SEC, and there was no such
accrual in 2003.



The net assets of the company represented by real
property and equipment decreased to $718,346 as of December 31, 2004 from
$1,332,338 as of December 31, 2003 as a result of the loss of the Wichita
and Ogden, Utah properties to the secured creditors of those properties.
This reduction in assets resulted in a decrease of the total assets of the
Company to $1,008,195 as of the year ended December 31, 2004 from $1,464,059
as of December 31, 2003.



Cash Flows



Cash flows used in operations were $979,788 for the year
ended December 31, 2004, compared to cash flows used in operations of
$466,846 for the year ended December 31, 2003. Cash flows used in operating
activities for the year ended December 31, 2004, are primarily attributable
to the operating expenses related to the investigation and due diligence
review of the mining interests, property and real estate interests that DFRC
acquired or investigated during the year ended December 31, 2004 and
represent an increase from the prior year due to the change in the nature of
DFRC's operations.  Cash flows used in investing activities decreased to
$59,084 for the year ended December 31, 2004 from $67,813 used in investing
activities for the year ended December 31, 2003.  Cash flows from financing
activities increased from $540,925 in 2003 to $1,166,260 in 2004, resulting
primarily from the exercise of more stock options in 2004.



LIQUIDITY AND CAPITAL RESOURCES



As of December 31, 2004, DFRC had current assets of
$289,849 and current liabilities of $2,257,282.  A substantial portion of
DFRC's current liabilities as of December 31, 2004, consist of the current
portion of notes payable and related party payables.  DFRC's current portion
of notes payable were $716,846 at December 31, 2004 and DFRC was indebted to
related parties of DFRC in the sum of $323,517 for loans and advances made
to DFRC.



During the fiscal year ended December 31, 2004, the
Company's board of directors has authorized the issuance of 1,956,799,270
(adjusted to reflect the 1 for 1,000 reverse stock split) shares of common
stock as compensation to various individuals for services rendered to the
Company.  All the shares were issued pursuant to the S-8 Registration
Statement of the Company.  The shares were issued as compensation to
employees, consultants, and advisors to the Company due to the lack of cash
flow from the Company's operations and to retain the services and provide
timely payment of obligations to those individuals.



SUBSEQUENT EVENTS-2005



During the current year of 2005, the Company's board of
directors has authorized the issuance of 1,855,000,000 shares of the
Company's common stock as payment to various individuals for

19



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services that they have rendered to the Company.  These
issuances of common shares are a continuation of the Company policy set
forth above to issue shares as compensation for individuals providing
services to the Company.



DFRC believes that it does not have sufficient cash, cash
equivalents and operating income to maintain its business at its existing
level in 2005. DFRC will require significant new capital in order to execute
its strategic plan and believes that this capital will only be available
through an offering of shares of its common stock. Our success in raising
this capital will depend upon our ability to access equity capital markets
and we may not be able to do so or to do so on acceptable terms. If we fail
to obtain funds on acceptable terms we will not be able to execute our
strategic plan and would have to delay or abandon some or all of our plans
for growth.  If we are able to obtain funds we believe that the terms of
such arrangement will result in an offering that is highly dilutive to
existing holders of shares of our common stock because of the price at which
we would have to issue those shares and the large number of shares we would
have to issue at those prices.



ABILITY TO CONTINUE AS A GOING CONCERN



DFRC's ability to continue as a going concern is in
doubt.  As DFRC has incurred a loss from its operations during the both
calendar years 2003 and 2004 and has had losses in prior years as well.
DFRC will need to substantially decrease its operating expenses, increase
its operating income, and raise significant additional capital.  There is no
assurance that DFRC will be able to accomplish all or any of these items.
In the event that these events do not take place DFRC will in all
probability not be able to continue as a going concern in calendar year
2005.



Impact of Inflation



DFRC believes that inflation has had a negligible effect
on operations over the past three years.  DFRC believes that it can offset
inflationary increases in the cost of material and labor by increasing and
improving operating efficiencies.



General Real Estate Investment Risks



DFRC's investments are subject to varying degrees of risk
generally incident to the ownership of real property.  Real estate values
and income from DFRC's current properties may be adversely affected by
changes in national or local economic conditions and neighborhood
characteristics, changes in interest rates and in the availability, cost and
terms of mortgage funds, occupancy rates in DFRC's properties, the impact of
present or future environmental legislation and compliance with
environmental laws, the ongoing need for capital improvements, changes in
governmental rules and fiscal policies, civil unrest, acts of God, including
earthquakes and other natural disasters which may result in uninsured
losses, acts of war, adverse changes in zoning laws and other factors which
are beyond the control of DFRC.



Value and Illiquidity of Real Estate



Real estate investments are relatively illiquid.  The
ability of DFRC to vary its ownership of real estate property in response to
changes in economic and other conditions is limited.  If DFRC must sell an
investment, there can be no assurance that DFRC will be able to dispose of
it in the time period it desires or that the sales price of any investment
will recoup the amount of DFRC's investment.

20



---

Property Taxes



DFRC's real property is subject to real property taxes.
The real property taxes on the real property may increase or decrease as
property tax rates change and as the property is assessed or reassessed by
taxing authorities. If property taxes increase, DFRC's operations could be
adversely affected.



Mining Interests



DFRC is in the final stages of evaluation of an option to
acquire various mining concessions located in the Sierra Madre mountain
range of Mexico.  Expenses were incurred during the first quarter of 2005
and during the year ended December 31, 2004 in an effort to conduct the
necessary due diligence and investigation of the potential for mining
sufficient quantities of precious metals from the concessions to operate a
profitable mining recovery effort at the subject location.  Additional
expenses are expected from this evaluation process and the expected return
from future mining operations, if any are undertaken by the Company, are
still to be determined.



ITEM 7.	FINANCIAL STATEMENTS



The Company's financial statements for the fiscal
year ended December 31, 2004 are attached hereto as pages F-1 through
F-20.

21



---































DIVERSIFIED FINANCIAL RESOURCES CORPORATION



CONSOLIDATED FINANCIAL STATEMENTS



December 31, 2004 and 2003











22



---







DIVERSIFIED FINANCIAL RESOURCES CORPORATION



INDEX TO FINANCIAL STATEMENTS





Page



Independent Auditors' Report	F-2



Consolidated Balance Sheets	F-3



Consolidated Statements of Operations	F-4



Consolidated Statements of Stockholders' Deficit	F-5



Consolidated Statements of Cash Flows	F-7



Notes to Consolidated Financial Statements	F-8















F-1

23



---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM



To the Board of Directors and

Stockholders of Diversified Financial Resources
Corporation



We have audited the accompanying consolidated balance
sheet of Diversified Financial Resources Corporation as of December 31, 2004
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the year ended December 31, 2004, These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated
financial statements of Diversified Financial Resources Corporation as of
December 31, 2003, were audited by other auditors whose report dated April
2, 2004, on those consolidated statements included an explanatory paragraph
describing conditions that raised substantial doubt as to the Company's
ability to continue as a going concern as discussed in Note 1 the
consolidated financial statements.



We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by the management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Diversified Financial Resources Corporation as of December 31,
2004, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the
United States of America.



The accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the Company
has incurred a loss and has a stockholders' deficit. These conditions raise
substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



Mendoza Berger & Company, LLP



/s/ Mendoza Berger & Company, LLP

Irvine, California

April 16, 2005



F-2

24



---



|DIVERSIFIED FINANCIAL RESOURCES CORP.
CONSOLIDATED BALANCE SHEETS                                                                                                                                                               | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | 
|                                                                                                                                                                                                                                | 
|ASSETS                                                                                                                                                                                                                          | 
|Current assets:                                                                                                                                                                                                                 | 
|Cash and cash equivalents                                                                                                                                                                                                       | 
|Money market funds                                                                                                                                                                                                              | 
|Receivable from Finance 500                                                                                                                                                                                                     | 
|Investments, available for sale,
net                                                                                                                                                                                            | 
|Receivables                                                                                                                                                                                                                     | 
|Receivable - JR Chapman                                                                                                                                                                                                         | 
|Prepaid expenses                                                                                                                                                                                                                | 
|Deposits                                                                                                                                                                                                                        | 
|                                                                                                                                                                                                                                | 
|Total current assets                                                                                                                                                                                                            | 
|                                                                                                                                                                                                                                | 
|Property and equipment, net                                                                                                                                                                                                     | 
|                                                                                                                                                                                                                                | 
|                                                                                                                                                                                                                                | 
|Total assets                                                                                                                                                                                                                    | 
|                                                                                                                                                                                                                                | 
|LIABILITIES AND STOCKHOLDERS'
DEFICIT                                                                                                                                                                                           | 
|Current liabilities:                                                                                                                                                                                                            | 
|Accounts payable                                                                                                                                                                                                                | 
|Accrued payroll and taxes                                                                                                                                                                                                       | 
|Accrued expenses                                                                                                                                                                                                                | 
|Litigation settlement payable                                                                                                                                                                                                   | 
|Lines-of-credit                                                                                                                                                                                                                 | 
|Notes payable - related parties                                                                                                                                                                                                 | 
|Current portion of notes payable                                                                                                                                                                                                | 
|                                                                                                                                                                                                                                | 
|Total current liabilities                                                                                                                                                                                                       | 
|Lines-of-credit                                                                                                                                                                                                                 | 
|Notes payable                                                                                                                                                                                                                   | 
|                                                                                                                                                                                                                                | 
|Total liabilities                                                                                                                                                                                                               | 
|                                                                                                                                                                                                                                | 
|Commitments and contingencies                                                                                                                                                                                                   | 
|                                                                                                                                                                                                                                | 
|Stockholders' deficit                                                                                                                                                                                                           | 
|Preferred stock; $.001 par value, 200,000,000
and 2,000,000 shares authorized at December 31, 2004 and 2003, respectively;
13,150 shares issued and outstanding at December 31, 2004 and
2003                                   | 
|Common stock; no par value; 10,000,000,000 and 200,000,000
shares authorized at December 31, 2004 and 2003, respectively; 2,081,599,872
and 11,208 shares issued and outstanding as of December 31, 2004 and 2003,
respectively | 
|Additional paid-in capital                                                                                                                                                                                                      | 
|Accumulated other comprehensive
loss                                                                                                                                                                                            | 
|Accumulated deficit                                                                                                                                                                                                             | 
|                                                                                                                                                                                                                                | 
|Total stockholders' deficit                                                                                                                                                                                                     | 
|                                                                                                                                                                                                                                | 
|Total liabilities and stockholders'
deficit                                                                                                                                                                                     | 
|                                                                                                                                                                                                                                | 





See accompanying notes to financial
statements.					F - 3

25



---



|DIVERSIFIED FINANCIAL RESOURCES CORP.
STATEMENT OF OPERATIONS                               
|--------------------------------------------------------------------------------------------
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Revenue                                                                                     
|General and administrative expenses                                                         
|Mining exploration expenses                                                                 
|                                                                                            
|Loss from operations                                                                        
|                                                                                            
|Gain on sale of securities                                                                  
|Impairment loss                                                                             
|Interest expense                                                                            
|Loss on sale of property                                                                    
|                                                                                            
|Net loss before equity interest in minority net
income (loss) and provision for income taxes
|Provision for income taxes                                                                  
|                                                                                            
|Loss before equity interest in minority income
(loss)                                       
|                                                                                            
|Loss before interest in net loss of
subsidiaries                                            
|                                                                                            
|Net loss                                                                                    
|                                                                                            
|                                                                                            
|Net loss per share - basic and
diluted                                                      
|Weighted average number of common shares outstanding - basic
and diluted                    







See accompanying notes to financial
statements.						F - 4



26



---





|DIVERSIFIED FINANCIAL RESOURCES
CORP.                      
|-----------------------------------------------------------
|STATEMENTS OF STOCKHOLDERS'
DEFICIT                        
|Years ended December 31, 2004 and
2003                     
|Page 1 of 2                                                
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Balances at December 31, 2002                              
|                                                           
|Issuance of preferred stock for
services                   
|                                                           
|Issuance of common stock for:                              
|Cash                                                       
|Services                                                   
|Acquisition of subsidiaries                                
|                                                           
|Comprehensive loss:                                        
|Net loss                                                   
|Other comprehensive loss on investments,
available for sale
|                                                           
|                                                           
|Balances at December 31, 2003                              
|                                                           
|Issuance of common stock for:                              
|Cash, compensation, and construction
costs                 
|Services                                                   
|Other - accounts payable and MTC
agreement                 
|                                                           
|Comprehensive loss:                                        
|Net loss                                                   
|Other comprehensive loss on investments,
available for sale
|                                                           
|                                                           
|Balances at December 31, 2004                              
|                                                           





See accompanying notes to financial statements.
                       F - 5



27



---



|DIVERSIFIED FINANCIAL RESOURCES CORP.
STATEMENTS OF STOCKHOLDERS' DEFICIT
Years ended December 31, 2004 and 2003
|----------------------------------------------------------------------------------------------------------------
|Page 2 of 2                                                                                                     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Balances at December 31, 2002                                                                                   
|                                                                                                                
|Issuance of preferred stock for
services                                                                        
|                                                                                                                
|Issuance of common stock for:                                                                                   
|Cash                                                                                                            
|Services                                                                                                        
|Acquisition of subsidiaries                                                                                     
|                                                                                                                
|Comprehensive loss:                                                                                             
|Net loss                                                                                                        
|Other comprehensive loss on investments,
available for sale                                                     
|                                                                                                                
|Balances at December 31, 2003                                                                                   
|                                                                                                                
|Issuance of common stock for:                                                                                   
|Cash, compensation, and construction
costs                                                                      
|Services                                                                                                        
|Other - accounts payable and MTC
agreement                                                                      
|                                                                                                                
|Comprehensive loss:                                                                                             
|Net loss                                                                                                        
|Other comprehensive loss on investments,
available for sale                                                     
|                                                                                                                
|Balances at December 31, 2004                                                                                   
|                                                                                                                





See accompanying notes to financial statements.	
                  F - 6

28



---





|DIVERSIFIED FINANCIAL RESOURCES CORP.
CASH FLOW STATEMENT
|---------------------------------------------------------
|                                                         
|                                                         
|Cash flows from operating
activities:                    
|Net loss                                                 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Changes in assets and liabilities:                       
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net cash used in operating
activities                    
|                                                         
|Cash flow from investing activities                      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net cash (used in) provided by investing
activities      
|                                                         
|Cash flows from financing
activities                     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net cash provided by financing
activities                
|                                                         
|Net increase (decrease) in cash                          
|                                                         
|Cash and cash equivalents at beginning of
year           
|                                                         
|Cash and cash equivalents at end of
year                 
|                                                         



See accompanying notes to financial statements. 	
                      F - 7

29



---



NOTES TO FINANCIAL STATEMENTS



Note 1 - Basis of Presentation, Current Operating
Environment and Significant Accounting Policies



Organization



Diversified Financial Resources Corporation (DFRC) was
organized under the laws of the State of Delaware on January 6, 1993. DFRC
and its subsidiaries (the Company) are primarily engaged in the rental of
commercial and residential real estate.



On June 30, 2003, the Company acquired approximately 83%
of Wichita Development Corporation (Wichita), in exchange for 1,148,251
common shares of the Company.  The shares issued in the acquisition were
valued at $218,168 ($.19 per share).  This value was determined based on the
net price per share realized on the issuance of the Company's common shares
issued for cash, to other entities, during the same period.



In addition, as part of the acquisition agreement, the
Company guaranteed that 1,000,000 of the shares issued would have an
aggregate liquidation value of not less than $1.00 per share within 36
months from the date of the agreement.  If the liquidation value is not
satisfied with the initial issuance of shares, the Company would be required
to issue additional common shares sufficient to satisfy the guaranteed
value.



Wichita and it's 83% owned subsidiary, Salt Lake
Development, Inc., own one commercial building and four condos as of
December 31, 2004.  Wichita also has a wholly owned subsidiary, Wichita
Properties Corporation, which has no significant assets or liabilities.



On March 24, 2003, the Company entered into an agreement
to purchase all of the issued and outstanding shares of MT&C Diversified
Land and Natural Resources Corporation (MT&C) in exchange for the
issuance of 6,000,000 common shares of the Company.  John Chapman is one of
the shareholders of MT&C and is the current President and major
shareholder of the Company.



The common shares issued were valued at $6,000 (par
value) and the net deficit of MT&C was $16,602, which resulted in the
purchase price being in excess of the assets by $22,602.  At March 31, 2003,
the Company determined that the goodwill of $22,602 was impaired and,
therefore, recognized a loss equal to this amount.



On June 5, 2002, the Company entered into a Stock
Exchange Agreement to acquire 100% of the common stock of Diversified
Holdings-XIX, Inc. (Diversified), a real-estate holding company, in exchange
for common stock of the Company.  The common stock issued as a result of
this transaction was valued at the historical cost of the net assets of
Diversified.  Diversified owns two houses, one condo, and one duplex as of
December 31, 2004.



A formerly wholly owned subsidiary, eLocity, Inc
(eLocity), was engaged in building and maintaining websites.  Effective
April 30, 2002, all of the outstanding shares of eLocity's common stock were
distributed as a stock dividend to the shareholders of the Company and, as a
result, eLocity ceased to be a subsidiary of the Company.



F - 8





30



---

Going Concern



The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.  As of December
31, 2004, the Company had incurred a loss from operations, had negative
working capital and had a stockholders' deficit.  These conditions raise
substantial doubt about the ability of the Company to continue as a going
concern.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



The Company's ability to continue as a going concern is
subject to the Company's ability to obtain profitable operations or to
obtain necessary funding from outside sources.  Management anticipates that
operations will begin to provide positive cash flows during the next fiscal
year or that funding will be available to the Company at acceptable terms.
However, there can be no assurance they will be successful.



Principles of Consolidation



The consolidated financial statements presented herein
include the accounts of Diversified Financial Resources Corporation and its
subsidiaries.  All significant intercompany balances and transactions have
been eliminated.



Use of Estimates



The preparation of financial statements in conformity
with generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements, as well as
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ significantly from those estimates.



Reclassifications



Certain previously reported amounts have been
reclassified to conform to the current period presentation.



Cash and Cash Equivalents



For purposes of the statement of cash flows, the Company
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.



Concentration of Credit Risk



The Company maintains its cash in bank deposit accounts,
which, at times, may exceed federally insured limits.  The Company has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash and cash equivalents.



Investments



The Company classifies its investments as "available for
sale."  Securities classified as "available for sale" are carried in the
financial statements at fair value.  Realized gains and losses, determined
using the specific identification method, are included in operations;
unrealized holding gains and losses are reported as a separate component of

F - 9





32



---



accumulated other comprehensive income.  Declines in fair
value below cost that are other than temporary are included in
operations.



Property and Equipment



Property and equipment are stated at cost less
accumulated depreciation.  Depreciation is determined using the
straight-line method over the estimated useful lives of the assets.
Expenditures for maintenance and repairs are expensed when incurred and
betterments are capitalized.  Gains and losses on sale of property and
equipment are reflected in operations.



Impairment of Long-Lived Assets



The Company evaluates its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment of Long-Lived Assets".
Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that their net book
value may not be recoverable.  When such factors and circumstances exist,
the Company compares the projected undiscounted future cash flows associated
with the related asset or group of assets over their estimated useful lives
against their respective carrying amounts.  Impairment, if any, is based on
the excess of the carrying amount over the fair value of those assets and is
recorded in the period in which the determination was made.



Stock-Based Compensation



The Company accounts for stock option plans in accordance
with the provisions of Accounting Principles Board Opinion No. 25 ("APB
No. 25"), Accounting for Stock Issued to Employees, and related
interpretations, which require the Company to recognize compensation expense
on the grant date if the current market price of the stock exceeds the
exercise price.



In December 2002, the Financial Accounting Standards
Board ("FASB") issued the Statement of Financial Accounting Standard
No. SFAS 148 ("SFAS No. 148"), Accounting for
Stock-Based Compensation - Transition and Disclosure. SFAS No. 148
amended SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amended the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
SFAS No. 148 became effective for fiscal years ending after
December 15, 2002. The Company chose not to adopt the voluntary change
to the fair value based method of accounting for stock-based employee
compensation. If the Company chose to adopt such a method in the future, its
implementation pursuant to SFAS No. 148 could have a material
effect on its consolidated financial position and results of operations.







F - 10

33



---







|34                                                                                  | Years ended December 31,
|----------------------------------------------------------------------------------- | ------------------------
|                                                                                    | 2004                    
|                                                                                    |                         
|Net loss applicable to common
stockholders, as reported                             | $ (5,927,969)           
|Add: total stock-based employee
Compensation                                        | (1,881,000)             
|                                                                                    |                         
|Pro-forma net loss                                                                  | $ (7,808,969)           
|                                                                                    | ===========             
|Basic and diluted net loss per share
applicable to common stockholders, as
Reported | $          (0.06)       
|Effect of stock-based compensation
expense per share                                | (0.02)                  
|                                                                                    |                         
|Pro forma net loss available to common
stockholders per share (basic and diluted)   | $          (0.08)       
|                                                                                    | ===========             



The Black Scholes option-pricing model was used in the
fair value method with the following assumptions:



|                                      | Years ended December 31,
|------------------------------------- | ------------------------
|                                      | 2004                    
|                                      |                         
|                                      |                         
|Risk-free interest rate               | 1.41                    
|Dividend yield                        | -                       
|Volatility factor                     | 2027%                   
|Weighted-average expected option
life | 7 days                  



For purposes of the adjusted pro forma disclosures, the
estimated fair value of the options is amortized to expense over the vesting
period. The weighted-average fair value of options granted during 2004 was
$.0005, and there were no options granted in 2003.



Revenue Recognition



Rental revenue is generally recognized at the time rents
are invoiced and collectibles is reasonably assured.  This policy meets the
criteria of Staff Accounting Bulletin 101in that there is persuasive
evidence of an existing contract or arrangement, services have been
provided, the price is fixed and determinable and the collectibles is
reasonably assured.



Income Taxes



Deferred income taxes are provided in amounts sufficient
to give effect to temporary differences between financial and tax reporting,
principally related to net operating loss carryforwards.



F - 11



35



---





Comprehensive Loss



Under SFAS No. 130, Reporting Comprehensive
Income or Loss, the reporting and display of comprehensive loss and its
components is required in the financial statements.

For the periods presented in the accompanying
consolidated financial statements, the Company classifies unrealized holding
gains and losses as a separate component of accumulated other comprehensive
income.



Net Loss Per Share



The computation of basic earnings per common share is
based on the weighted average number of shares outstanding during the
year.



The computation of diluted earnings per common share is
based on the weighted average number of shares outstanding during the year
plus the common stock equivalents which would arise from the exercise of
stock options and warrants outstanding using the treasury stock method and
the average market price per share during the year.



Common stock equivalents are not included in the diluted
earnings per share calculation when their effect is anti-dilutive.



Fair Value of Financial
Instruments



The Company's financial instruments consist of cash,
receivables, payables, lines-of-credit and notes payable.  The carrying
amount of cash, receivables and payables approximates fair value because of
the short-term nature of these items.  The carrying amount of the
lines-of-credit and the notes payable approximates fair value as the
instruments bear interest at market interest rates.



Note 2 - Investments



Investments, classified as available-for-sale, consist of
the following:



|                           | December 31,
|-------------------------- | ------------
|                           | 2004        
|                           |             
|                           |             
|Investments, at cost       | $    65,001 
|Unrealized holding loss    | (63,949)    
|                           |             
|Investments, at fair value | $      1,052
|                           | =========   



Changes in the unrealized holding loss on investment
securities available-for-sale and reported as a separate component of
accumulated other comprehensive income are as follows:



|                             | December 31,
|---------------------------- | ------------
|                             | 2004        
|                             |             
|                             |             
|Balance at beginning of year | $   (45,453)
|Unrealized holding loss      | (18,496)    
|                             |             
|                             |             
|Balance at end of year       | $   (63,949)
|                             | =========   



F - 12

36



---



Note 3 - Letter of Intent to acquire Mining Interests
in Mexico



On October 30, 2004, the Company entered into a Letter of
Intent with John Chapman ("Chapman") and Dennis Thompson ("Thompson"), as
individuals, both of whom are officers and directors of the Company, to
acquire the maximum interest allowable under Mexican Law, but not less than
a controlling interest, in Amermin S.A. de C.V. ("Amermin").  As
consideration for the transfer of ownership in Amermin to the Company,
Chapman and Thompson will retain a collective 27% royalty interest in the
mining interests of Amermin, subject to certain limitations.  The royalty
interest will be based on the net value of the minerals extracted and the
net smelting revenues.



As a condition precedent to the transfer of ownership in
Amermin from Chapman and Thompson to the Company, Chapman and Thompson must
acquire the interest in Amermin from the current owners who are not related
parties.  The parties entered into a Letter of Intent for the transfer of
ownership in Amermin on October 30, 2004.  As consideration for the transfer
of ownership in Amermin from the current owners to Chapman and Thompson, the
current owners will retain a collective 10% royalty interest in the mining
interests of Amermin, subject to certain limitations.  The royalty interest
will be based on the net value of the minerals extracted and the net
smelting revenues.





As a condition precedent to the transfer of ownership in
Amermin from its current owners to Chapman and Thompson, certain mining
interests owned by Minera Tres de Mayo S.A. de C.V. ("Minera) must be
acquired by Amermin.  Minera, the current owners of Amermin, Chapman and
Thompson entered into a Mining, Exploration and Purchase Option Agreement
("Purchase Agreement") for the transfer of certain mining interests and
assets in Mexico to Amermin.



The Purchase Agreement provides a four-month exclusive
option to the current owners of Amermin to acquire the mining interests and
assets in Mexico.  The option period began December 16, 2004.  Consideration
for the exclusive option was $300,000, and the Company paid this amount in
December 2004.  These funds are non-refundable, and are being used to
establish the existence of proven reserves at the mine. The Company also
incurred expenses of $82,789 in 2004 related to establishing the existence
of proven reserves at the mine.



The Purchase Agreement provides for a purchase price of
USD $1.2 million, $500,000 of which is due upon exercise of the option and
payment of the remaining $700,000 will be made monthly beginning four months
after the option exercise, and in amounts ranging from USD $50,000 to USD
$100,000.  The option period expired April 16, 2005, and the Company did not
make payment of the $500,000 to exercise the option.  The parties are in
negotiation to extend the option exercise period, and management believes
the negotiations will result in a successful extension of the option period.
  In addition, the Purchase Agreement provides Minera with a 10% royalty
interest in the mining interests of Amermin, subject to certain limitations.
  The royalty interest will be based on the net value of the minerals
extracted and the net smelting revenues.



The Company expects to acquire the mining interests and
assets pursuant to these agreements, and to operate Amermin as a subsidiary.
  From January 1, 2005 through March 22, 2005, the Company has made payments
under the agreements and incurred expenses related to the agreements
totaling $130,000.



Note 4 - Notes Receivable



Notes receivable consist of the following:

F - 13



37



---







|38                                                                                                       | December 31,  
|-------------------------------------------------------------------------------------------------------- | --------------
|                                                                                                         | 2004          
|                                                                                                         |               
|                                                                                                         |               
|Note receivable from Creative Marketing
Group, Inc., bearing interest at 2% and due on September 4, 2004 | $            -
|                                                                                                         |               
|Note receivable from Valley Air, Inc.,
non-interest bearing and due on demand                            | -             
|                                                                                                         |               
|Notes receivable from unrelated parties,
non-interest bearing and due on demand                          | 3,571         
|                                                                                                         |               
|                                                                                                         | $       3,571 
|                                                                                                         | ========      



Note 5 - Property and Equipment



Property and equipment consists of the
following:



|                              |  | December 31,
|----------------------------- |  | ------------
|                              |  | 2004        
|                              |  |             
|Land                          |  | $    176,100
|Building and
improvements     |  | 735,128     
|Equipment                     |  | 4,121       
|                              |  |             
|                              |  | 915,349     
|                              |  |             
|Less accumulated
depreciation |  | (129,136)   
|Less SFAS 144 write-down      |  | (67,867)    
|                              |  |             
|                              |  | $    718,346
|                              |  | =========   



Note 6 - Litigation settlement payable



The Company and its president have been named as
respondents in a complaint filed by the Securities and Exchange Commission
("SEC"). The civil suit, SEC v. Wolfson, et. al., case number 2:03 CV 0914K,
was filed in the United States District Court for the District of Utah. The
complaint alleges that the Company and its president failed to accurately
and fully disclose the nature of the Company's relationship with the Sukumo,
Group, Inc. and to timely disclose the execution of the Offshore Purchase
Agreement. The complaint further alleges that the Company's president took
actions in 2003 to manipulate the price of the Company's stock in the
marketplace. The proposed settlement orders the Company's president to pay a
civil penalty of $120,000 in installments over a one year term and prohibits
him from serving as an officer or director of any publicly held company and
from participating in the issuance of any penny stock.









F - 14

39



---







The Company's president has been
named as a respondent in a complaint filed by the Securities and Exchange
Commission ("SEC"). The civil suit, SEC v. Allen Z. Wolfson, et. al., case
number 2:02 CV 1086 (TC), was filed in the United States District Court for
the District of Utah. The complaint alleges that the Company's president
took actions in 2003 to manipulate the price of the Company's stock in the
marketplace. Upon the acceptance of the proposed settlement agreement by the
SEC, the agreement holds the president liable for disgorgement of $64,714,
representing profits gained as a result of the conduct alleged in the
complaint, plus interest in the amount of $16,785 and a civil penalty of
$120,000, payable in installments over a one year term. Additionally, the
settlement bars the Company's president from participating in the issuance
of any penny stock.



The president has executed the proposed settlement
agreements and has submitted them to the SEC Commissioner for approval. SEC
approval is pending. The president currently serves as an officer and
director of the Company and will continue to do so until the final
settlement is approved by the SEC. Upon approval, the president will resign
as an officer and director of the Company.



Note 7 - Lines-of-Credit



The Company has two separate lines-of-credit with a bank,
each secured by real estate, bearing interest at a variable rate (currently
10.75%).  The lines-of-credit mature in December 2005 and require monthly
interest only payments.  At December 31, 2004, the maximum amounts available
under the lines-of-credit have been fully drawn by the Company.



Note 8 - Notes Payable - Related Parties



Notes payable - related parties consists of the
following:



|                                                                                                                                   | December 31,
|---------------------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                                   | 2004        
|                                                                                                                                   |             
|                                                                                                                                   |             
|Note payable to Nexia, non-interest bearing,
due on demand                                                                         | $ 150,000   
|                                                                                                                                   |             
|Note payable to Nexia, non-interest bearing,
due on demand                                                                         | 13,894      
|                                                                                                                                   |             
|Note payable to Nexia, payable in monthly
installments of $31,250, including interest at 115%, all due on
or before April 17, 2005 | 100,000     
|                                                                                                                                   |             
|Payable to John Chapman, non-interest
bearing,
due on demand                                                                       | 59,623      
|                                                                                                                                   |             
|                                                                                                                                   | $ 323,517   
|                                                                                                                                   | ========    





F - 15

40



---



Note 9 - Notes Payable



Notes payable consist of the following:



|                                                                                                                                                                                                        | December 31, 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------
|                                                                                                                                                                                                        | 2004         
|                                                                                                                                                                                                        |              
|                                                                                                                                                                                                        |              
|Note payable to First Bank of Beverly Hills,
secured by real estate, payable monthly installments of $5,341, including
interest at 7.7%.  The note went into default subsequent to December 31,
2004.   | $ 557,653    
|41Note payable to Interbay Funding,
LLC, secured by real estate, payable in monthly installments of $2,689,
including interest at 10.97%.  This note went into default subsequent to
December 31, 2004. | -            
|                                                                                                                                                                                                        |              
|Note payable to IndyMac Bank, secured by
real estate, payable in monthly installments of $851 including interest at
8.5%.                                                                               | 99,193       
|                                                                                                                                                                                                        |              
|Note payable to Alexander & Wade, due
2005, total interest on obligation is $20,000.                                                                                                                    | 60,000       
|                                                                                                                                                                                                        |              
|                                                                                                                                                                                                        |              
|Total notes payable                                                                                                                                                                                     | 716,846      
|Less current portion                                                                                                                                                                                    | (716,846)    
|                                                                                                                                                                                                        |              
|Long-term portion                                                                                                                                                                                       | $           -
|                                                                                                                                                                                                        | ========     



Note 10 - Preferred Stock



The Company has authorized 200,000,000 shares of
preferred stock with a par value of $.001, and established two series of
preferred shares designated as Series A Convertible Preferred Stock,
consisting of 1,000,000 shares, and Series B Convertible Preferred Stock,
consisting of 50,000,000 shares.



The Series A Convertible Preferred Stock has the
following rights and privileges:

The shares are convertible at the option of the holder at
any time into common shares, at a conversion rate of one share of Series A
Convertible Preferred Stock for 100 shares of common stock for a period of
10 years from the issuance date.

*	Requires two-thirds voting majority to authorize
changes to equity.

*	Redemption provision at option of directors for $10
per share plus the greater of $3 per share or 50% of market capitalization
divided by 2,000,000.

*	The holders of the shares are entitled to one
hundred (100) votes for each share held.

*	Upon the liquidation of the Company, the holders of
the shares will be entitled to receive $10 per share plus redemption
provision before assets distributed to other shareholders.

*	The holders of the shares are entitled to dividends
equal to common share dividends.

F - 16

42



---



The Series B Convertible Preferred Stock has the
following rights and privileges:

*	The shares are not convertible into any other class
or series of stock.

*	The holders of the shares are entitled to five
hundred (500) votes for each share held.  Voting rights are not subject to
adjustment for splits that increase or decrease the common shares
outstanding.

*	Upon the liquidation of the Company, the holders of
the shares will be entitled to receive $.001 per share plus redemption
provision before assets distributed to other shareholders.

*	The holders of the shares are entitled to dividends
equal to common share dividends.

*	Once any shares of Series B Convertible Preferred
Stock are outstanding, at least two-thirds of the total number of shares of
Series B Convertible Preferred Stock outstanding must approve the following
transactions:

*	Alter or change the rights, preferences or
privileges of the Series B Preferred Stock.

*	Create any new class of stock having preferences
over the Series B Preferred Stock.

*	Repurchase any of the Company's common stock.

*	Merge or consolidate with any other Company, except
wholly-owned subsidiaries of the Company.

*	Sell, convey or otherwise dispose of , or create or
incur any mortgage, lien, or charge or encumbrance or security interest in
or pledge of, or sell and leaseback, in all or substantially all of the
property or business of the Company.

*	Incur, assume or guarantee any indebtedness maturing
more than 18 months after the date on which it is incurred, assumed or
guaranteed by the Company, except for operating leases and obligations
assumed as part of the purchase price of property.



Note 11 - Common Stock



On February 7, 2003, the Company's Board of Directors
approved a 1-for-200 reverse common stock split.  All common stock amounts
and per share information have been retroactively adjusted to reflect this
reverse common stock split in the accompanying consolidated financial
statements.



On February 23, 2004, the Company's Board of Directors
approved an increase in the number of authorized common shares from
200,000,000 to 10,000,000,000, and changed the par value from $.001 per
share to no stated par value per share.



On October 12, 2004, the Company's Board of Directors
approved a 1-for-1,000 reverse common stock split and changed the par value
of the common stock from $.001 to no par value.  All common stock amounts
and per share information have been retroactively adjusted to reflect this
reverse common stock split in the accompanying consolidated financial
statements.







F - 17

43



---





As discussed in Note 1, the Company
is obligated to issue common shares with an aggregate value of $1,000,000 by
June 30, 2006 in connection with the acquisition of Wichita from Nexia.  As
of December 31, 2004, the number of common shares required for issuance to
satisfy the remainder of the

$1,000,000 aggregate value totaled approximately 2
billion.  As of March 31, 2005, the number of common shares required for
issuance to satisfy the remaining value totaled approximately 132.3
million.



The Board of Directors authorized the issuance of 1.6
billion shares of common stock from January 1, 2005 through March 24, 2005
pursuant to the 2005 Benefit Plan of Diversified Financial Resources Corp.
discussed in Note 12.



Note 12 - Common Stock Options



On January 29, 2004, the Board of Directors adopted the
2004 Benefit Plan of Diversified Financial Resources Corp.  Through October
11, 2004, the plan authorized the grant of stock options to eligible
employees, directors, and other individuals to purchase up to an aggregate
of 4,050,000,000 shares of stock.  Options granted under the plan have an
exercise price and term established by the plan administrator at the date of
grant.  The plan is intended to advance the interest of the Company by
attracting and helping to  ensure the retention of competent directors,
employees, and consultants, and to provide incentives to those individuals
to devote their utmost efforts to the advancement of the Company.



A summary of option activity is presented
below:



|                                    |  | Shares          |  | Weighted Average
Exercise Price
|----------------------------------- |  | --------------- |  | -------------------------------
|                                    |  |                 |  |                                
|                                    |  |                 |  |                                
|Outstanding as of December 31.
2002 |  | -               |  | $                       -      
|Granted                             |  | -               |  | $                       -      
|Exercised                           |  | -               |  | $                       -      
|Cancelled                           |  | -               |  | $                       -      
|                                    |  |                 |  |                                
|Outstanding as of December 31.
2003 |  | -               |  | $                       -      
|Granted                             |  | 3,564,060,000   |  | $               0.0005         
|Exercised                           |  | (3,564,060,000) |  | $               0.0005         
|Cancelled                           |  | -               |  | $                      -       
|                                    |  |                 |  |                                
|Outstanding as of December 31,
2004 |  | -               |  | n/a                            
|                                    |  | ========        |  | ========                       



On January 4, 2005, the Board of Directors adopted the
2005 Benefit Plan of Diversified Financial Resources Corp.  The plan
authorizes the grant of stock options to eligible employees, directors, and
other individuals to purchase up to an aggregate of 2,000,000,000 shares of
stock.  Options granted under the plan have an exercise price and term
established by the plan administrator at the date of grant.  The plan is
intended to advance the interest of the Company by attracting and ensuring
the retention of competent directors, employees, and consultants, and to
provide incentives to those individuals to devote their utmost efforts to
the advancement of the Company.  Through March 24, 2005, options to purchase
1,855,000,000 shares of common stock were granted and exercised.

F - 18



44



---



Note 13 - Income Taxes



The difference between income taxes at statutory rates
and the amount presented in the financial statements is a result of the
following:



|                                     | Year ended December 31,
|------------------------------------ | -----------------------
|                                     | 2004                   
|                                     |                        
|Income tax benefit at statutory
rate | $ (1,548,818)          
|Change in valuation allowance        | 1,548,818              
|                                     |                        
|                                     | $                   -  
|                                     | ========               



Deferred tax assets are as follows at December 31,
2004:



|                                 | Year ended December 31,
|-------------------------------- | -----------------------
|                                 |                        
|Net operating loss carryforwards | $ 1,904,938            
|Valuation allowance              | (1,904,938)            
|                                 | $              -       
|                                 |                        
|                                 | ========               



The Company has a net operating loss carryforwards of
approximately $6,200,000 which begins to expire in the year 2022.  The
amount of net operating loss carryforwards that can be used in any one year
will be limited by significant changes in the ownership of the Company and
by the applicable tax laws which are in effect at the time such
carryforwards can be utilized.



Note 14 - Related Party Transactions



During the year ended December 31, 2004, the Company
issued 30,000,000 shares of restricted stock to John Chapman for
acquisition-related services, and recorded $2.4 million as expense; issued
2,000,000,000 shares of restricted common stock to John Chapman to satisfy
accrued salary of $100,000; advanced John Chapman $13,000; and accepted
advances from John Chapman of $3,000.  John Chapman's monthly salary was
increased from $20,000 per month to $50,000 per month in April, 2004, and
the Company owes $127,000 of salary to John Chapman at December 31, 2004.
The Company recorded compensation expense to John Chapman of $510,000 and
$140,000 for the years ended December 31, 2004 and 2003, respectively.



During the year ended December 31, 2004, the Company
issued 1,500,000,000 shares of restricted common stock to Board of Director
members and recorded $300,000 as expense.



During the year ended December 31, 2004, the Company
executed a Letter of Intent with John Chapman and Dennis Thompson, both of
whom are officers and directors of the Company, to acquire certain mining
interests in Mexico.  See Note 3.



During the year ended December 31, 2004, the Company
executed a note payable with Nexia Holdings, Inc. ("Nexia") for $100,000;
and issued 26,000,000 shares to Nexia pursuant to the acquisition agreement
for Wichita.  See Note 1.  During the year ended December 31, 2003, the
Company executed a note payable with Nexia for $150,000.  See Note 8.

F - 19



45



---



During the year ended December 31,
2004, the Company issued 101,786,230 shares of common stock to Richard
Surber of Hudson Consulting Group, Inc. ("Hudson") to satisfy obligations
under a consulting agreement between the Company and Hudson that provides
for monthly payments of $7,500.  The Company paid Hudson $104,000 under the
consulting agreement in 2003.  Richard Surber is a principal shareholder of
Nexia Holdings, Inc.



During the year ended December 31, 2003, the Company
issued 13,150 shares of preferred stock to John Chapman for consulting
services and rent of $131,500.



DFRC has a lease for its approximate 1600 sq. ft. office
located at 1771 Wolviston Way, San Diego, CA 92154 from Mr. Chapman, the
president of DFRC.  The home office space is subleased in a related party
transaction in Mr. Chapman's residence.  The term of the lease is from May
2002 through May of 2005; monthly rental is in the amount of $6,500.  The
lease has a three year extension available for a monthly rental of $8,500.
DFRC is liable for all utilities for the premises.  Rental expense of
approximately $78,000 was recorded during 2004 and 2003.  Future obligations
under the lease total $32,500.



Note 15 - Supplemental Cash Flow Information



For the years ended December 31, 2004 and 2003, the
Company paid interest of approximately $177,000 and $59,000,
respectively.



No amounts were paid for income taxes during the
years ended December 31, 2004 and 2003.



During the year ended December 31, 2004:

*	The Company issued 3.9 billion shares of common
stock for services and recorded $3.1 million as expense related to the
issuances.

*	The Company recorded $411,000 of compensation
expense related to the issuance and exercise of stock options.

*	The Company executed a deed in lieu of foreclosure
on its property in Wichita, KS and recorded a loss of $273,000 on the
transaction, recorded a reduction in the related mortgage liability of
$268,000, and wrote-off a deposit

*	The Company issued 102 million shares of common
stock to satisfy accounts payable totaling $126,000.

*	The Company reserved or wrote-off receivables
totaling $60,000.

*	The Company issued stock for the prepayment of
construction costs totaling $44,000.

During the year ended December 31, 2003:

*	The Company acquired approximately 83% of the common
stock of Wichita Development Corporation.  The Company recorded net assets
from the acquisition as follows:





F - 20

46



---





|Marketable securities       | $          64,769
|--------------------------- | -----------------
|Receivables, net            | 1,515            
|Property and equipment, net | 1,873,230        
|Accounts payable            | (73,370)         
|Notes payable               | (1,571,384)      
|47Minority interest         | (91,943)         
|                            |                  
|                            | 202,817          
|Less common stock issued    | (218,168)        
|Net cash received           | $          15,351
|                            | ========         



*	The Company acquired 100% of the common stock of
MT&C.  The Company recorded net assets from the acquisition as
follows:



|Goodwill                 | $          22,602 
|------------------------ | ------------------
|Related party payable    | (21,702)          
|                         |                   
|                         | 900               
|Less common stock issued | (6,000)           
|                         |                   
|Net cash received        | $            5,100
|                         | ========          



The Company's building located in
Ogden, Utah was sold at a trustee's sale.  The sale resulted in the Company
reducing the following assets and liabilities:



|Property and equipment, net        | $       (939,949)
|---------------------------------- | -----------------
|Accounts payable                   | 12,045           
|Notes payable                      | 588,207          
|                                   |                  
|Loss on trustee's sale of
property | $       (339,697)
|                                   | ========         



Note 16 - Subsequent Events



Subsequent to the year ended December 31, 2004:



Options to purchase 1,855,000,000 shares of common stock
were granted to and exercised by employees and consultants of the Company
under the 2005 Benefit Plan of Diversified Financial Resources Corp.



The Company issued 145,000,000 shares of common stock to
an individual involved in the mining operations in Mexico.



The Company made payments under the mining acquisition
agreements and incurred expenses related to the mining acquisition totaling
$130,000.



The Company entered into purchase and sale agreements for
all of its real estate properties in February 2005 with a non-affiliate.
The transactions have not closed as of March 24, 2005.  Proceeds to the
Company consist of notes payable aggregating $1,320,000, and bear interest
at 6.75%.  Interest is payable monthly beginning April 2005,



F - 21

48



---

and the notes and all unpaid interest are due in February
2006.  The mortgage, line-of-credit and property tax liabilities associated
with the properties, which total approximately $941,000 at December 31,
2004, remain the responsibility of the Company.  The net book value of the
properties subject to the purchase and sale agreements is approximately
$715,000 at December 31, 2004.



The parties have discussed modifying the purchase and
sale agreements in the event that closing issues prevent the transactions
from closing in a timely manner.  The purchase and sale agreements would be
rescinded, and new agreements executed for the sale of the common stock of
the subsidiaries that own the properties.









F - 22



49



---

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE



The Company has had no disagreements with its independent
accountants and has made no changes during the year ended December 31, 2004,
except as reported in the August 13, 2004 Form 8-K filed the Company
reporting the dismissal of Jones Simkins, LLP as its Certifying Accountant
and the retention of Mendoza Berger & Company, LLP of Irvine, California
as its new Certifying Accountant.  The Company has had no disagreements with
Jones Simkins LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to their satisfaction, would have caused
Jones Simkins to make reference in connection with their opinion on the
subject matter of the disagreement.



ITEM 8A.   CONTROLS AND PROCEDURES



The Company carried out an evaluation, under the
supervision and with the participation of our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Exchange Act Rule
13a-14(c) as of the end of the period covered by this Annual Report on Form
10-KSB and as of a date within 90 days of the filing of this report. Based
on that evaluation, it has been concluded that the Company's disclosure
controls and procedures are effective to ensure that information required to
be disclosed in the Company's Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms, and that such information is
accumulated and communicated to them to allow timely decisions regarding
required disclosure.



There has been no change in our internal control over
financial reporting that occurred during our last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.



PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors, Executive Officers and Control Persons

50



---



NAME					AGE			POSITION



John Chapman			62		President, CFO and
Director

Dennis Thompson	51		Director

John Casey			31		Director

John R.  Chapman was appointed to DFRC's
Board of Directors and as the Company's President on March 23, 2003. Over
the last five years, Mr. Chapman has been primarily involved in the business
of real estate development and mortgage banking.  He will serve as a
director until the next annual shareholders meeting.



Dennis Thompson was appointed to DFRC's
Board of Directors on May 30, 2002.  Mr. Thompson has been a consultant who
provides expert advice concerning equipment, construction, and mining
operations.  He develops and implements construction plans for gold and coal
mining operations.  Prior to that time, Mr. Thompson was involved in
manufacturing industry and construction field.  He attended the Iron Workers
Apprentice School in West Virginia from 1972-1975. He will serve as a
director until the next annual shareholders meeting.



John Casey was appointed to DFRC's Board of
Directors on October 30, 2002.  Mr. Casey has over five years experience as
a Site Manager supervising and directing numerous on-site craft and salaried
personnel as well as various subcontractors.  He also has 4 additional years
of environmental remedial experience as a Site Safety Officer, Operations
Foreman, and heavy equipment operator.  He served as the Operations Foreman
and Site Safety Officer for a crew of twelve on a 125 acre precious metal
mining operations from 1996 through 1998.  He served in the United States
Air Force for four years assigned to a fire fighting/hazardous materials
handling unit.  He has worked on buried drum recovery projects as well as
landfill construction barrier/ cut-off trench installations, low level
radiological decommissioning and demolition projects, and the construction
of landfill capping systems.  He will serve as a director until the next
annual shareholders meeting.



Involvement in Certain Legal Proceedings.



John R. Chapman has been named as a defendant in a civil
injunctive action filed on September 30, 2002, by the Securities and
Exchange Commission in the United States District Court in the State of
Utah, Civil Action No. 2:02CV-1086.  The action alleges that the named
defendants were involved in a scheme to manipulate the stock of Freedom
Surf, Inc. from July 2000 through November 2000.  The complaint seeks
injunctive relief as to Mr. Chapman that could prevent him from serving as
an officer or a director for the Company in the future, or other relief that
could impact Mr. Chapman's ability to serve the Company.



The President of DFRC has been named individually as a
defendant in a civil action filed on October 16, 2003 by the Securities and
Exchange Commission in the United States District Court for the State of
Utah, Civil Action No. 2:03CV00914.  The action alleges that Mr. Chapman
engaged in manipulation of the share price of DFRC and failed to adequately
disclose the role of The Sukumo Group, Inc. in the sale of securities of
DFRC to off shore investors.  Relief sought by the complaint includes
penalties, fines and injunctive relief against Mr. Chapman, discussions of
terms to resolve the claims are ongoing.



Compliance with Section 16(a) of the Exchange
Act



Based solely on a review of Forms 4 and 5 furnished to
DFRC and filed with the Securities and Exchange Commission under Rule
16a-3(e) promulgated under the Securities Exchange Act of 1934, DFRC
believes that all directors, officers and beneficial

51



---





owners of more than 10% of any class of equity securities
filed on a timely basis the reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year.



Code of Ethics



Due to the small group of employees and management, DFRC
has not adopted a code of ethics that apply to its officers and employees.
The board of directors is in direct contact with management on a regular
basis and believes that all conduct is under sufficient supervision to
protect DFRC and its shareholders from any unethical activity.



ITEM 10. EXECUTIVE COMPENSATION



The **following tables and notes present for
the three years ended December 31, 2004 the compensation received by the
DFRC's President and Vice President. No other executive officer of DFRC
received compensation which exceeded $100,000 during any of the three years
ended December 31, 2004.**

SUMMARY COMPENSATION TABLE

|                                     | Long Term Compensation
|------------------------------------ | ----------------------
|Annual Compensation                  | Awards                
|Name and
Principal Position          | Year                  
|John Chapman,
President, Director(4) | 2004
2003             
|Sandra Jorgensen                     | 2002                  
|Thomas Clay
President, Director      | 2002                  

(1) Cash compensation paid to Mr.
Chapman.

(2) 3,000,000 shares issued November 1, 2002 were reduced
to 15,000 by the 1 for 200 reverse split.

(3) Mr. Chapman received 13,150 shares of Class A
preferred shares from the company on December 11, 2003; 7,150 shares for
rent on the office space he provided to the Company and 6,000 shares as
compensation for the months October, November and December of 2003.

(4)  This number reflects the 1 for 1,000 reverse stock
split that was effective as of November 1, 2004, the restricted stock awards
consisted of 30,000,000 pre reverse shares granted to Mr. Chapman in January
of 2004 as compensation for services he provided with regard to the
acquisitions being explored by DFRC and 2,000,000,000 pre-reverse shares
granted to Mr. Chapman in August of 2004.



DFRC entered into an Employment Agreement dated June 5,
2003 with John Chapman, pursuant to which Mr. Chapman has agreed to serve as
the Company's President, Chief Executive Office and Chief Financial Officer.
  The agreement provides for a base salary of $50,000 per month, payable in
cash, common or preferred stock of the Company, the form to be at the
election of Mr. Chapman.





52



---



Compensation of Directors



On March 30, 2005, the board of directors of the
Company approved the issuance to John Chapman, the president and director of
the Company, to John Casey a director of the Company and Dennis Thompson a
director of the Company of 70,000,000 shares to each individual of
restricted common stock of the Company, pursuant to Section 4(2) of the
Securities Act of 1933 as compensation for each of the director's services
provided to the Company.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT



The table below sets forth information with respect to
the beneficial ownership of the Common Stock by (i) each of the directors of
DFRC, (ii) each person known by DFRC to be the beneficial owner of five
percent or more of the outstanding Common Stock, and (iii) all executive
officers and directors as a group, as of April 13, 2005.  The total number
of shares of common stock issued and outstanding on April 13, 2005 is
4,481,597,981.  Unless otherwise indicated, DFRC believes that the
beneficial owner has sole voting and investment power over such shares.



|NAME AND ADDRESS OF
BENEFICIAL OWNER                                       | NUMBER OF SHARES BENEFICIALLY
OWNED | PERCENTAGE OF
OWNERSHIP
|-------------------------------------------------------------------------- | ----------------------------------- | -----------------------
|Dennis Thompson
1771 Wolviston Way.
San Diego, CA 92154                    | 502,000                             | 0.01%                  
|John Chapman,
President & Director
1771 Wolviston Way.
San Diego, CA 92154 | 2,532,370                           | 0.06%                  
|John Casey, Director
1771 Wolviston Way.
San Diego, CA 92154               | 500,000                             | 0.01%                  
|Officers and Directors
as a group (2 persons)                              | 3,534,370                           | 0.078%                 



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS



Effective May 1, 2002, the Company entered into a lease
agreement with John Chapman, currently president, CEO and a director of the
Company, for the lease of an approximately 1,600 square foot office space
located at 1771 Wolviston Way, San Diego, California, 92154, where the
offices of the Company are located. The leased space is Mr. Chapman's
residence.  The lease is for a term of 3 years, with an option to extend for
three additional years. Monthly rent for the space is $6,500 and the Company
is responsible for all utilities in the space.



The Company entered into an Employment Agreement dated
June 5, 2003 with John Chapman, pursuant to which Mr. Chapman has agreed to
serve as the Company's President, Chief Executive Officer and Chief
Financial Officer. The agreement provides for a base salary of $50,000 per
month, payable in cash, common or preferred stock of the Company, the form
to be at the election

of Mr. Chapman.

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On August 31, 2004 the Company's board of directors
authorized the issuance of 2,000,000 (2,000,000,000 pre-reverse split stock)
shares of restricted common stock to be issued to John Chapman, President of
the Company as partial satisfaction of salary and compensation due to him
for his services as President and CEO of the Company.



On January 21, 2004, the board of directors of the
Company approved the issuance to John Chapman, the president of the Company,
of 30,000,000 shares of restricted common stock of the Company, pursuant to
Section 4(2) of the Securities Act of 1933 as compensation for his services
with regard to the acquisitions being explored by the Company.



Subsequent events to December 31, 2004



On March 31, 2005, the board of directors of the Company
approved the issuance to John Chapman, the president and director of the
Company, to John Casey a director of the Company and Dennis Thompson a
director of the Company of 70,000,000 shares to each individual of
restricted common stock of the Company, pursuant to Section 4(2) of the
Securities Act of 1933 as compensation for each of the director's services
provided to the Company.  These shares have not been issued as of April 13,
2005.



ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K



Exhibits. Exhibits required to be attached by
Item 601 of Regulation S-B are listed in the Index to Exhibits beginning on
page 32 of this Form 10-KSB, which is incorporated herein by reference.



(b)Reports on Form 8-K.



1. On February 6, 2004, DFRC filed an 8-K report DFRC on
the issuance of 30,000,000 shares of its restricted common stock to the
Company's president, John Chapman as compensation for services rendered in
connection with various acquisition candidates of DFRC.  DFRC further
reported that it had in December of 2003 issued to Mr. Chapman 13,150 shares
of its Class A preferred shares, 6,000 shares for compensation and 7,150
shares in payment of rent due to him.
2. On August 13, 2004, DFRC filed an 8-K report of the
actions of the 
Company in dismissing Jones Simkins LLP as its Certified Public Accountants
and retaining Mendoza Berger & Company of Irvine, California as its new
Certified Public Accountants.   The Company has had no disagreements with
Jones Simkins LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to their satisfaction, would have caused
Simkins to make reference in connection with their opinion on the subject
matter of the disagreement.
3. On September 3, 2004, DFRC filed an 8-K report of the
issuance of unregistered shares of its common stock.  The first issuance of
1,500,000,000 shares of restricted common stock to each of the three
directors of the Company, John Chapman, John Casey and Dennis Thompson each
received 500,000,000 shares as compensation for their services as directors
of the Company.  A second issuance of 2,000,000,000 shares of restricted
common stock was made to John Chapman as compensation for his services as
President of the Company.
4. On December 10, 2004, DFRC filed an 8-K report  on
the issuance of 457,910,014, since November 22, 2004,  shares of the
Company's common stock pursuant to the Company's S-8 Registration Statement.
  All of the shares were issued as payment for services provided by
individuals to the Company.
5. On December 16, 2004, DFRC filed an 8-K reporting
that the Company has a total of 1,271,869,981 shares of its common stock
issued and outstanding.
6. On December 22, 2004, DFRC filed an 8-K reported the
issuance of 50,000,000 shares of restricted common stock to Equitilink LLC
pursuant to Section 4(2) of the Securities Act of 1933.  The shares were
issued as compensation for public relations and communications services
provided pursuant to a written agreement with the Company.



Subsequent to the end of the year no reports on Form 8-K
have been filed:



ITEM 14.   PRINCIPAL ACCOUNTANT
FEES AND SERVICES



Audit Fees



Audit fees are for professional services for the audit of
DFRC's annual financial statements, and for the review of the financial
statements included in the Company's filing on Form 10-QSB and for services
that are normally provided in connection with statutory and regulatory
filings or engagements.  DFRC has paid to Jones Simkins, PC, audit fees of
approximately $35,000 for 2003 and $21,268 also need to fix the font on the
number to Mendoza for 2004.



Audit Related Fees



Audit related fees are funds paid for the assurance and
related services reasonably related to the performance of the audit or the
review of DFRC's financial statements.  DFRC has paid to Jones Simkins, PC,
audit related fees of approximately $2,000 for 2003 and $21,268 also need to
change the font on the number to Mendoza for 2004.



Tax Fees



The tax fees are those funds paid for professional
services with respect to tax compliance, tax advice, and tax planning.  DFRC
paid no professional tax fees to Jones Simkins, LP during 2004 and 2003.



All Other Fees



Fees paid for permissible work that does not fall within
any of the three other fees categories set forth above.  No other fees
paid.



Pre-approved Policy for Audit and Non-Audit
Services



DFRC does not have a standing audit committee and the
full board of directors performs all functions of an audit committee,
including the pre-approval of all audit and non-audit services prior to DFRC
engaging an accountant.  All of the services rendered for DFRC by Mendoza
LLP were pre-approved by the board of directors of DFRC.





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SIGNATURES



In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this Annual Report and any
subsequent amendments thereto to be signed on its behalf by the undersigned,
thereunto duly authorized.



Diversified Financial Resources Corporation





Dated: April 12, 2005			By:  /s/
John Chapman                         .

John Chapman, CEO, President and CFO



Pursuant to the requirements of the Securities Act of
1934, this Annual Report has been signed below by the following persons in
their respective capacities with the Registrant and on the dates indicated.



SIGNATURE
TITLE	                  DATE



CEO, Pres.,
CFO and  Director	              April  12, 2005

/s/ John Chapman .

John Chapman

Director             	               April   12, 2005

/s/ Dennis Thompson    .

Dennis Thompson



/s/ John Casey              
  Director	                April  12, 2005

John Casey





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Exhibit 31(i)				CERTIFICATIONS



I, John Chapman, certify that:



1.   I have reviewed this annual Report on Form 10-KSB of
Diversified Financial Resources Corporation for the period ending December
31, 2004;



2.   Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this annual report;



3.  Based on my knowledge, the financial statements, and
other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
annual report;



4.  The registrant's other certifying officers and I am
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:



(a) Designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;



(b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and



(c) Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



5.  The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):



(a) All significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and



(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and



Date: April 14,
2005				____

John Chapman, CEO and CFO



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Exhibit 32(i)



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of
Diversified Financial Resources Corporation (the "Company") on Form 10-KSB
for the period ending December 31, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the"Report"), I, John Chapman, Chief
Executive and Sole Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section  1350, as adopted pursuant to Section  906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and
belief:



I have reviewed this annual report on Form 10-KSB of
Diversified Financial Resources Corporation and:



(a)     The Annual Report on Form 10-KSB of the Company to
which this certification is attached as an exhibit, fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and



(b)     The financial information contained in the Report
fairly presents, in all material respects, the financial condition and
result of operations of the Company.





/s/ John Chapman

John Chapman

CEO and CFO

April 14, 2005



58



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INDEPENDENT AUDITORS' CONSENT





We consent to the incorporation by reference of our
financial statement audit report dated April 2, 2004, appearing in this
Annual Report on Form 10-KSB of Diversified Financial Resources Corporation
for the year ended December 31, 2004.







JONES SIMKINS, P.C.



/s/ Jones Simkins, P.C.



Logan, Utah

April 19, 2005





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